10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-34354

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

(Exact name of Registrant as specified in its Charter)

Luxembourg	98-0554932
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

40, avenue Monterey

L-2163 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive offices) (Zip Code)

(352) 24 69 79 00

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act):

Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No þ

As of October 21, 2016, there were 18,877,614 outstanding shares of the registrant’s shares of beneficial interest (excluding 6,535,134 shares held as treasury stock).

Table of Contents

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

FORM 10-Q

			Page
PART I — Financial Information
	Item 1	Interim Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations and Comprehensive Income	4
		Condensed Consolidated Statements of Equity	5
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	44
	Item 4	Controls and Procedures	44
PART II — Other Information
	Item 1	Legal Proceedings	45
	Item 1A	Risk Factors	46
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	46
	Item 6	Exhibits	47
SIGNATURES			48

2

PART I — FINANCIAL INFORMATION

Item 1.  Interim Condensed Consolidated Financial Statements (Unaudited)

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	September 30, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	134,948		$	179,327
Available for sale securities	45,174			—
Accounts receivable, net	101,580			105,023
Prepaid expenses and other current assets	31,927			21,751
Total current assets	313,629			306,101
Premises and equipment, net	109,785			119,121
Goodwill	89,905			82,801
Intangible assets, net	162,976			197,003
Deferred tax assets, net	4,847			3,619
Other assets	12,190			13,153
Total assets	$	693,332		$	721,798
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	101,361		$	91,871
Current portion of long-term debt	5,945			5,945
Deferred revenue	10,927			15,060
Other current liabilities	13,846			16,266
Total current liabilities	132,079			129,142
Long-term debt, less current portion	468,689			522,233
Other non-current liabilities	13,790			18,153
Commitments, contingencies and regulatory matters (Note 22)
Equity:
Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,878 outstanding as of September 30, 2016; 25,413 shares authorized and issued and 19,021 outstanding as of December 31, 2015)	25,413			25,413
Additional paid-in capital	101,013			96,321
Retained earnings	359,435			369,270
Accumulated other comprehensive loss	(2,156		)	—
Treasury stock, at cost (6,535 shares as of September 30, 2016 and 6,392 shares as of December 31, 2015)	(406,559		)	(440,026		)
Altisource equity	77,146			50,978
Non-controlling interests	1,628			1,292
Total equity	78,774			52,270
Total liabilities and equity	$	693,332		$	721,798

See accompanying notes to condensed consolidated financial statements.

3

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

	Three months ended  September 30,						Nine months ended  September 30,
	2016			2015			2016			2015
Revenue	$	252,745		$	272,776		$	758,676		$	781,579
Cost of revenue	174,002			173,850			517,236			514,835
Gross profit	78,743			98,926			241,440			266,744
Selling, general and administrative expenses	53,886			51,338			161,709			155,310
Change in the fair value of Equator Earn Out	—			—			—			(7,591		)
Income from operations	24,857			47,588			79,731			119,025
Other income (expense), net:
Interest expense	(5,952		)	(7,041		)	(18,481		)	(21,396		)
Loss on HLSS equity securities and dividends received, net	—			—			—			(1,854		)
Other income (expense), net	(109		)	653			2,608			1,477
Total other income (expense), net	(6,061		)	(6,388		)	(15,873		)	(21,773		)
Income before income taxes and non-controlling interests	18,796			41,200			63,858			97,252
Income tax provision	(7,324		)	(3,303		)	(12,808		)	(8,101		)
Net income	11,472			37,897			51,050			89,151
Net income attributable to non-controlling interests	(883		)	(851		)	(1,973		)	(2,457		)
Net income attributable to Altisource	$	10,589		$	37,046		$	49,077		$	86,694
Earnings per share:
Basic	$	0.57		$	1.94		$	2.63		$	4.42
Diluted	$	0.54		$	1.82		$	2.49		$	4.19
Weighted average shares outstanding:
Basic	18,715			19,091			18,669			19,608
Diluted	19,568			20,411			19,738			20,688
Comprehensive income:
Net income	$	11,472		$	37,897		$	51,050		$	89,151
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities, net of income tax benefit (provision) of $(2,070), $0, $889, $0	5,016			—			(2,156		)	—
Comprehensive income, net of tax	16,488			37,897			48,894			89,151
Comprehensive income attributable to non-controlling interests	(883		)	(851		)	(1,973		)	(2,457		)
Comprehensive income attributable to Altisource	$	15,605		$	37,046		$	46,921		$	86,694

See accompanying notes to condensed consolidated financial statements.

4

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

	Altisource Equity
	Common stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Treasury stock, at cost			Non-controlling interests			Total
	Shares
Balance, December 31, 2014	25,413	$	25,413	$	91,509	$	367,967		$	—		$	(444,495	)	$	1,049		$	41,443
Net income	—	—		—		86,694			—			—			2,457			89,151
Distributions to non-controlling interest holders	—	—		—		—			—			—			(2,144		)	(2,144		)
Share-based compensation expense	—	—		3,258		—			—			—			—			3,258
Exercise of stock options	—	—		—		(2,054		)	—			2,386			—			332
Issuance of restricted shares for CastleLine acquisition	—	—		—		(21,612		)	—			36,039			—			14,427
Repurchase of shares	—	—		—		—			—			(48,971		)	—			(48,971		)
Balance, September 30, 2015	25,413	$	25,413	$	94,767	$	430,995		$	—		$	(455,041	)	$	1,362		$	97,496
Balance, December 31, 2015	25,413	$	25,413	$	96,321	$	369,270		$	—		$	(440,026	)	$	1,292		$	52,270
Comprehensive income:
Net income	—	—		—		49,077			—			—			1,973			51,050
Other comprehensive loss, net of tax	—	—		—		—			(2,156		)	—			—			(2,156		)
Distributions to non-controlling interest holders	—	—		—		—			—			—			(1,637		)	(1,637		)
Share-based compensation expense	—	—		4,692		—			—			—			—			4,692
Exercise of stock options	—	—		—		(58,912		)	—			67,788			—			8,876
Repurchase of shares	—	—		—		—			—			(34,321		)	—			(34,321		)
Balance, September 30, 2016	25,413	$	25,413	$	101,013	$	359,435		$	(2,156	)	$	(406,559	)	$	1,628		$	78,774

See accompanying notes to condensed consolidated financial statements.

5

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine months ended  September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	51,050		$	89,151
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	27,521			27,637
Amortization of intangible assets	36,432			27,995
Loss on HLSS equity securities and dividends received, net	—			1,854
Change in the fair value of acquisition related contingent consideration	(1,174		)	(7,302		)
Share-based compensation expense	4,692			3,258
Bad debt expense	763			3,477
Gain on early extinguishment of debt	(5,464		)	(1,986		)
Amortization of debt discount	307			379
Amortization of debt issuance costs	850			1,045
Deferred income taxes	17			54
Loss on disposal of fixed assets	30			50
Changes in operating assets and liabilities:
Accounts receivable	3,505			(19,681		)
Prepaid expenses and other current assets	(10,167		)	2,001
Other assets	496			2,085
Accounts payable and accrued expenses	7,005			(20,876		)
Other current and non-current liabilities	(9,828		)	10
Net cash provided by operating activities	106,035			109,151
Cash flows from investing activities:
Additions to premises and equipment	(16,525		)	(27,670		)
Acquisition of businesses, net of cash acquired	(9,617		)	(11,193		)
Purchase of available for sale securities	(48,219		)	(29,966		)
Proceeds received from sale of and dividends from HLSS equity securities	—			28,112
Other investing activities	266			722
Net cash used in investing activities	(74,095		)	(39,995		)
Cash flows from financing activities:
Repayment and repurchases of long-term debt	(49,237		)	(29,087		)
Proceeds from stock option exercises	8,876			332
Purchase of treasury stock	(34,321		)	(48,971		)
Distributions to non-controlling interests	(1,637		)	(2,144		)
Other financing activities	—			(500		)
Net cash used in financing activities	(76,319		)	(80,370		)
Net decrease in cash and cash equivalents	(44,379		)	(11,214		)
Cash and cash equivalents at the beginning of the period	179,327			161,361
Cash and cash equivalents at the end of the period	$	134,948		$	150,147
Supplemental cash flow information:
Interest paid	$	17,244		$	19,770
Income taxes paid, net	14,178			6,638
Non-cash investing and financing activities:
Acquisition of businesses with restricted shares	$	—		$	14,427
Increase (decrease) in payables for purchases of premises and equipment	2,458			(5,326		)

See accompanying notes to condensed consolidated financial statements.

6

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

Altisource Portfolio Solutions S.A., together with its subsidiaries (which may be referred to as “Altisource,” the “Company,” “we,” “us” or “our”), is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. Altisource’s proprietary business processes, vendor and electronic payment management software and behavioral science-based analytics improve outcomes for marketplace participants.

We were formed under the laws of Luxembourg and are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.”

We conduct our operations through three reportable segments: Mortgage Services, Financial Services and Technology Services. In addition, we report our corporate related expenditures and eliminations separately (see Note 23 for a description of our business segments).

Basis of Accounting and Presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation.

Altisource consolidates two cooperative entities which are managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource: Best Partners Mortgage Cooperative, Inc., a mortgage cooperative doing business as Lenders One^® (“Lenders One”) and Best Partners Mortgage Brokers Cooperative, Inc., a mortgage cooperative doing business as Wholesale One^® (“Wholesale One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option) and to Wholesale One under a management agreement that ends on July 8, 2039 (with automatic renewals for three successive five-year periods).

The management agreements between MPA and Lenders One and between MPA and Wholesale One, pursuant to which MPA is the management company, represent variable interests in variable interest entities. MPA is the primary beneficiary of Lenders One and Wholesale One as it has the power to direct the activities that most significantly impact each of these cooperatives’ economic performance and the right to receive benefits from each of these cooperatives. As a result, Lenders One and Wholesale One are presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. As of September 30, 2016, Lenders One had total assets of $4.0 million and total liabilities of $1.9 million. As of December 31, 2015, Lenders One had total assets of $4.9 million and total liabilities of $3.7 million. As of September 30, 2016 and December 31, 2015, Wholesale One had less than $0.1 million in total assets and less than $0.1 million in total liabilities.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 15, 2016.

7

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1 — Quoted prices in active markets for identical assets and liabilities

Level 2 — Observable inputs other than quoted prices included in Level 1

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Recently Adopted Accounting Pronouncement

On January 1, 2016, Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, became effective. As a result of this accounting change, the Company now presents debt issuance costs, net as a direct deduction from the related debt (see Note 12). Prior to January 1, 2016, debt issuance costs, net were included in other assets. We adopted the standard retrospectively. Accordingly, prior period amounts were reclassified to conform to the current presentation.

Future Adoption of New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of this standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This standard will require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. It also amends certain financial statement presentation and disclosure requirements associated with the fair value of financial instruments. This standard will be effective for annual periods beginning after December 31, 2017, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard introduces a new lessee model that brings substantially all leases on the balance sheet. The standard will require companies to recognize lease assets and lease liabilities on their balance sheets and disclose key information about leasing arrangements in their financial statements. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard clarifies guidance on principal versus agent considerations in connection with revenue recognition. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting

8

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard will require companies to recognize all award-related excess tax benefits and tax deficiencies in their income statements, classify any excess tax benefits as an operating activity in their statements of cash flows, provide companies with the option of estimating forfeitures or recognizing forfeitures as they occur, modify the statutory tax withholding requirements and classify cash paid by employers when directly withholding shares for tax withholding purposes as an investing activity in their statements of cash flows. This standard will be effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard provides guidance on identifying performance obligations in a contract with a customer and clarifying several licensing considerations, including whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time) and guidance on sales-based and usage-based royalties. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard addresses collectability, sales taxes and other similar taxes collected from customers, non-cash consideration, contract modifications at transition and completed contracts at transition. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its statement of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.  This standard will require that companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs.  Current guidance prohibits companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party.  This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period.  Early adoption of this standard is permitted.  The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

NOTE 2 — CUSTOMER CONCENTRATION

Ocwen Financial Corporation together with its subsidiaries (“Ocwen”) is our largest customer. Ocwen purchases certain mortgage services and technology services from us under the terms of master services agreements and amendments thereto (collectively, the “Service Agreements”) with terms extending through August 2025. Certain of the Service Agreements, among other things, contain a “most favored nation” provision and the parties to the Service Agreements have the right to renegotiate pricing. Certain of the Service Agreements also prohibit Ocwen from establishing fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward Residential, Inc. and Residential Capital, LLC servicing portfolios acquired by Ocwen in December 2012 and February 2013, respectively. In addition, Ocwen purchases certain origination services from Altisource under an agreement that extends through January 2017.

9

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Revenue from Ocwen primarily consists of revenue earned directly from Ocwen and revenue earned from the loans serviced by Ocwen when Ocwen designates us as the service provider. Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Mortgage Services	59	%	64	%	59	%	63	%
Financial Services	16	%	16	%	17	%	20	%
Technology Services	41	%	51	%	41	%	52	%
Consolidated revenue	56	%	60	%	56	%	59	%

For the nine months ended September 30, 2016 and 2015, we generated revenue from Ocwen of $422.2 million and $464.8 million, respectively ($141.6 million and $163.8 million for the third quarter of 2016 and 2015, respectively). Services provided to Ocwen during such periods and reported in the Mortgage Services segment included real estate asset management and sales, residential property valuation, trustee management services, property inspection and preservation services and insurance services. Services provided to Ocwen and reported in the Financial Services segment included mortgage charge-off collections. Services provided to Ocwen and reported in the Technology Services segment included information technology infrastructure management and software applications. As of September 30, 2016, accounts receivable from Ocwen totaled $32.6 million, $21.8 million of which was billed and $10.8 million of which was unbilled. As of December 31, 2015, accounts receivable from Ocwen totaled $38.2 million, $20.4 million of which was billed and $17.8 million of which was unbilled.

We earn additional revenue related to the portfolios serviced by Ocwen when a party other than Ocwen selects Altisource as the service provider. For the nine months ended September 30, 2016 and 2015, we recognized revenue of $146.0 million and $164.7 million, respectively ($48.0 million and $56.7 million for the third quarter of 2016 and 2015, respectively), related to the portfolios serviced by Ocwen when a party other than Ocwen selected Altisource as the service provider. These amounts are not included in deriving revenue from Ocwen as a percentage of revenue in the table above.

NOTE 3 — TRANSACTIONS WITH RELATED PARTIES

Through January 16, 2015, William C. Erbey served as our Chairman as well as the Executive Chairman of Ocwen and Chairman of each of Home Loan Servicing Solutions, Ltd. (“HLSS”), Altisource Residential Corporation (“Residential”) and Altisource Asset Management Corporation (“AAMC”). Effective January 16, 2015, Mr. Erbey stepped down as the Executive Chairman of Ocwen and Chairman of each of Altisource, HLSS, Residential and AAMC and is no longer a member of the Board of Directors of any of these companies. Consequently, these companies are no longer related parties of Altisource, as defined by FASB ASC Topic 850, Related Party Disclosures. The disclosures in this note are limited to the periods that each of Ocwen, HLSS, Residential and AAMC were related parties of Altisource and are not necessarily reflective of current activities with these former related parties.

Ocwen

Revenue

For the period from January 1, 2015 through January 16, 2015, we estimated that we generated revenue from Ocwen of $22.9 million. Services provided to Ocwen during such period included real estate asset management and sales, residential property valuation, trustee management services, property inspection and preservation, insurance services, charge-off mortgage collections, information technology infrastructure management and software applications.

We record revenue we earn from Ocwen under the Service Agreements at rates we believe to be comparable market rates as we believe they are consistent with the fees we charge to other customers and/or fees charged by our competitors for comparable services.

Cost of Revenue and Selling, General and Administrative Expenses

At times, we have used Ocwen’s contractors and/or employees to support Altisource related services. Ocwen generally billed us for these contractors and/or employees based on their fully-allocated cost. Additionally, through March 31, 2015, we purchased certain data relating to Ocwen’s servicing portfolio in connection with a Data Access and Services Agreement. Based upon our previously provided notice, the Data Access and Services Agreement was terminated effective March 31, 2015. For the period from January 1, 2015 through January 16, 2015, we estimated that we incurred $1.9 million of expenses related to these items.

10

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

These amounts are reflected as a component of cost of revenue in the condensed consolidated statements of operations and comprehensive income.

We provided certain other services to Ocwen and Ocwen provided certain other services to us in connection with Support Services Agreements. These services primarily included such areas as vendor management, corporate services and facilities related services. Billings for these services were generally based on the fully-allocated cost of providing the service based on an estimate of the time and expense of providing the service or estimates thereof. Of the January 2015 billings to Ocwen, we estimated that $0.1 million related to the period from January 1, 2015 through January 16, 2015. Of the January 2015 billings from Ocwen, we estimated that $0.3 million related to the period from January 1, 2015 through January 16, 2015. These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

HLSS

Prior to April 2015, HLSS was a publicly traded company whose primary objective was the acquisition of mortgage servicing rights and related servicing advances, loans held for investment and other residential mortgage related assets. We provided HLSS certain finance, human resources, tax and facilities services and sold information technology services to HLSS under a support services agreement. For the period from January 1, 2015 through January 16, 2015, our billings to HLSS were immaterial.

Residential and AAMC

Residential is focused on providing quality, affordable rental homes to families throughout the United States. AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles that own real estate related assets. Its initial client is Residential.

We have agreements and amendments thereto, which extend through 2027, to provide Residential with renovation management, lease management, property management, real estate owned asset management, title insurance, settlement and valuation services. In addition, we have agreements with Residential and AAMC pursuant to which we may provide services such as finance, human resources, facilities, technology and insurance risk management. Further, we have separate agreements for certain services related to income tax matters, trademark licenses and technology products and services.

For the period from January 1, 2015 through January 16, 2015, we estimated that we generated revenue from Residential of $1.0 million. This amount is reflected in revenue in the condensed consolidated statements of operations and comprehensive income. This excludes revenue from services we provide to Residential’s loans serviced by Ocwen or other loan servicers where we were retained by Ocwen or Residential’s other loan servicers.

For the period from January 1, 2015 through January 16, 2015, our billings to AAMC were immaterial.

NOTE 4— ACQUISITIONS

Granite Acquisition

On July 29, 2016, we acquired certain assets and assumed certain liabilities of Granite Loan Management of Delaware, LLC (“Granite”) for $9.6 million in cash at closing. Granite provides residential and commercial loan disbursement processing, risk mitigation and construction inspection services to lenders.The Granite acquisition is not material in relation to the Company’s results of operations or financial position.

The preliminary allocation of the purchase price is as follows:

(in thousands)
Accounts receivable, net	$	1,103
Prepaid expenses	25
Other assets	25
Premises and equipment, net	299
Goodwill	8,449
	9,901
Accounts payable and accrued expenses	(111		)
Other current liabilities	(173		)
Purchase price	$	9,617

11

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

RentRange, Investability and Onit Solutions Acquisitions

On October 9, 2015, we acquired GoldenGator, LLC (doing business as RentRange^®) (“RentRange”), REIsmart, LLC (doing business as Investability^™) (“Investability”) and Onit Solutions, LLC, a support company for RentRange and Investability (collectively “RentRange and Investability”) for $24.8 million. RentRange is a leading provider of rental home data and information to the financial services and real estate industries, delivering a wide assortment of address and geography level data, analytics and rent-based valuation solutions for single and multi-family properties. Investability is an online residential real estate search and acquisition platform that utilizes data and analytics to allow real estate investors to access the estimated cash flow, capitalization rate, net yield and market value of properties for sale in the United States. The purchase price was composed of $17.5 million in cash and 247 thousand shares of restricted common stock of the Company with a value of $7.3 million as of the closing date. Upon issuance, the restricted shares were subject to transfer restrictions and potential forfeiture provisions. These restrictions and forfeiture provisions will lapse over a four year period, subject to the recipients meeting certain continued employment conditions with the Company and the satisfaction of certain acquisition related escrow release conditions. During the third quarter of 2016, management adjusted the allocation of the purchase price based upon information that subsequently became available relating to acquisition date working capital and the purchase price allocation to intangible assets. The working capital adjustment resulted in an obligation of the sellers to pay the Company $0.2 million. RentRange and Investability are not material in relation to the Company’s results of operations or financial position.

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	3		$	—		$	3
Accounts receivable, net	245			(76		)	169
Premises and equipment, net	2,471			(1,067		)	1,404
Other assets	199			(196		)	3
Trademarks and trade names	1,205			—			1,205
Databases/other	910			1,035			1,945
Non-compete agreements	330			—			330
Customer relationships	255			—			255
Goodwill	19,565			50			19,615
	25,183			(254		)	24,929
Accounts payable and accrued expenses	(391		)	46			(345		)
Purchase price	$	24,792		$	(208	)	$	24,584

CastleLine Acquisition

On July 17, 2015, we acquired CastleLine Holdings, LLC and its subsidiaries (“CastleLine”) for $33.4 million. CastleLine is a specialty risk management and insurance services firm that provides financial products and services to parties involved in the origination, underwriting, purchase and securitization of residential mortgages. The purchase consideration was composed of $12.3 million of cash at closing, $10.5 million of cash payable over four years from the acquisition date and 495 thousand shares of restricted common stock of the Company, that were subject to transfer restrictions, with a value of $14.4 million as of the closing date. Of the cash payable following acquisition, $3.8 million is contingent on certain future employment conditions of certain of the sellers, and therefore excluded from the purchase price. During the second quarter of 2016, management adjusted the allocation of the purchase price based upon information that subsequently became available relating to acquisition date working capital and the purchase price allocation to intangible assets. The CastleLine acquisition is not material in relation to the Company’s results of operations or financial position.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	1,088		$	—		$	1,088
Accounts receivable, net	510			(410		)	100
Prepaid expenses	66			(46		)	20
Restricted cash	2,501			—			2,501
Non-compete agreements	1,105			25			1,130
Databases/other	465			1,335			1,800
Customer relationships	395			—			395
Trademarks and trade names	150			10			160
Deferred taxes	—			356			356
Goodwill	28,125			(1,395		)	26,730
	34,405			(125		)	34,280
Accounts payable and accrued expenses	(875		)	38			(837		)
Deferred revenue	(87		)	87			—
Purchase price	$	33,443		$	—		$	33,443

NOTE 5 — AVAILABLE FOR SALE SECURITIES

During the nine months ended September 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million (no comparative amount in the third quarter of 2016). This investment is classified as available for sale and reflected in the condensed consolidated balance sheets at fair value at the balance sheet date ($45.2 million as of September 30, 2016) (no comparative amount as of December 31, 2015). Unrealized gains and losses on available for sale securities are reflected in other comprehensive income, unless there is an impairment that is other than temporary. In the event that a decline in market value is other than temporary, we would record a charge to earnings and a new cost basis in the investment would be established. During the nine months ended September 30, 2016, we incurred expenses of $3.4 million and earned dividends of $1.0 million related to this investment (no comparative amounts in 2015).

NOTE 6 — ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Billed	$	63,066		$	67,021
Unbilled	48,288			56,458
	111,354			123,479
Less: allowance for doubtful accounts	(9,774		)	(18,456		)
Total	$	101,580		$	105,023

Unbilled receivables consist primarily of certain asset management and default management services for which we generally recognize revenues over the service delivery period but bill following completion of the service. We also include amounts in unbilled receivables that are earned during a month and billed in the following month.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Maintenance agreements, current portion	$	7,213	$	7,000
Short-term investments in real estate	8,695		—
Income taxes receivable	3,132		633
Prepaid expenses	6,166		7,873
Other current assets	6,721		6,245
Total	$	31,927	$	21,751

NOTE 8 — PREMISES AND EQUIPMENT, NET

Premises and equipment, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Computer hardware and software	$	163,140		$	177,010
Office equipment and other	19,586			21,720
Furniture and fixtures	13,792			14,443
Leasehold improvements	35,726			35,503
	232,244			248,676
Less: accumulated depreciation and amortization	(122,459		)	(129,555		)
Total	$	109,785		$	119,121

Depreciation and amortization expense amounted to $27.5 million and $27.6 million for the nine months ended September 30, 2016 and 2015, respectively ($9.2 million and $9.2 million for the third quarter of 2016 and 2015, respectively), and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying condensed consolidated statements of operations and comprehensive income.

NOTE 9 — GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following is a summary of goodwill by segment:

(in thousands)	Mortgage Services			Financial Services		Total
Balance as of December 31, 2015	$	80,423		$	2,378	$	82,801
Acquisition of CastleLine (1)	(1,395		)	—		(1,395		)
Acquisitions of RentRange and Investability (2)	50			—		50
Acquisition of Granite	8,449			—		8,449
Balance as of September 30, 2016	$	87,527		$	2,378	$	89,905

⁽¹⁾  During the second quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the CastleLine acquisition. See Note 4.

⁽²⁾  During the third quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the RentRange and Investability acquisition. See Note 4.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Intangible assets, net

Intangible assets, net consist of the following:

	Weighted average estimated useful life (in years)	Gross carrying amount				Accumulated amortization						Net book value
(in thousands)		September 30, 2016		December 31, 2015		September 30, 2016			December 31, 2015			September 30, 2016		December 31, 2015
Definite lived intangible assets:
Trademarks and trade names	13	$	15,254	$	15,244	$	(7,419	)	$	(6,491	)	$	7,835	$	8,753
Customer related intangible assets	10	274,428		274,428		(146,890		)	(113,725		)	127,538		160,703
Operating agreement	20	35,000		35,000		(11,667		)	(10,354		)	23,333		24,646
Non-compete agreements	4	1,460		1,435		(405		)	(115		)	1,055		1,320
Intellectual property	10	300		300		(78		)	(55		)	222		245
Other intangible assets	5	3,745		1,375		(752		)	(39		)	2,993		1,336
Total		$	330,187	$	327,782	$	(167,211	)	$	(130,779	)	$	162,976	$	197,003

Amortization expense for definite lived intangible assets was $36.4 million and $28.0 million for the nine months ended September 30, 2016 and 2015, respectively ($11.5 million and $10.1 million for the third quarter of 2016 and 2015, respectively). Expected annual definite lived intangible asset amortization for 2016 through 2020 is $47.7 million, $34.6 million, $26.1 million, $20.7 million and $16.8 million, respectively.

NOTE 10 — OTHER ASSETS

Other assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Security deposits	$	5,599	$	5,341
Maintenance agreements, non-current portion	1,177		1,570
Restricted cash	4,505		4,801
Other	909		1,441
Total	$	12,190	$	13,153

NOTE 11 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Accounts payable	$	16,940	$	11,644
Accrued expenses - general	34,148		30,347
Accrued salaries and benefits	46,417		46,564
Income taxes payable	3,856		3,316
Total	$	101,361	$	91,871

15

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Other current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Unfunded cash account balances	$	2,995	$	6,395
Other	10,851		9,871
Total	$	13,846	$	16,266

NOTE 12 — LONG-TERM DEBT

Long-term debt consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Senior secured term loan	$	481,140		$	536,598
Less: debt issuance costs, net	(4,778		)	(6,184		)
Less: unamortized discount, net	(1,728		)	(2,236		)
Net long-term debt	474,634			528,178
Less: current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	468,689		$	522,233

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain wholly-owned subsidiaries are guarantors of the term loan (collectively, the “Guarantors”). We subsequently amended the senior secured term loan agreement to increase the principal amount of the senior secured term loan and, among other changes, re-establish the $200.0 million incremental term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year and increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement).

After giving effect to the third amendment entered into on August 1, 2014, the term loan must be repaid in equal consecutive quarterly principal installments of $1.5 million, which commenced on September 30, 2014, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement will become due on the earlier of (i) December 9, 2020 and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders or as otherwise provided in the senior secured term loan agreement upon the occurrence of any event of default under the senior secured term loan agreement.

In addition to the scheduled principal payments, subject to certain exceptions, the term loan is subject to mandatory prepayment upon issuances of debt, casualty and condemnation events and sales of assets, as well as from a percentage of Consolidated Excess Cash Flow if the leverage ratio is greater than 3.00 to 1.00, as calculated in accordance with the provisions of the senior secured term loan agreement (the percentage increases if the leverage ratio exceeds 3.50 to 1.00). No mandatory prepayments were owed for the nine months ended September 30, 2016.

During the nine months ended September 30, 2016, we repurchased portions of our senior secured term loan with an aggregate par value of $51.0 million at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt (no repurchases in the third quarter of 2016). During the nine months ended September 30, 2015, we repurchased portions of our senior secured term loan with an aggregate par value of $27.0 million at a weighted average discount of 9.8%, recognizing a net gain of $2.0 million on the early extinguishment of debt (repurchased aggregate par value of $11.0 million at a weighted average discount of 11.0%, recognizing a net gain of $0.9 million on the early extinguishment of debt for the third quarter of 2015). The net gains were included in other income (expense), net in the condensed consolidated statements of operations and comprehensive income.

The term loan bears interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Base Rate and (y) 2.00% plus (ii) a 2.50% margin. The interest rate at September 30, 2016 was 4.50%.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Term loan payments are guaranteed by the Guarantors and are secured by a pledge of all equity interests of certain subsidiaries as well as a lien on substantially all of the assets of Altisource Solutions S.à r.l. and the Guarantors, subject to certain exceptions.

The senior secured term loan agreement includes covenants that restrict or limit, among other things, our ability to: create liens and encumbrances; incur additional indebtedness; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases, dividends and repayment of junior indebtedness; change lines of business; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to our fiscal year and engage in mergers and consolidations.

The senior secured term loan agreement contains certain events of default, including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the senior secured term loan agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of covenants, (iv) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (v) default on any other debt that equals or exceeds $40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect. If any event of default occurs and is not cured within applicable grace periods set forth in the senior secured term loan agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of September 30, 2016, debt issuance costs were $4.8 million, net of $5.5 million of accumulated amortization. As of December 31, 2015, debt issuance costs were $6.2 million, net of $4.1 million of accumulated amortization.

Interest expense on the term loans totaled $18.5 million and $21.4 million for the nine months ended September 30, 2016 and 2015, respectively ($6.0 million and $7.0 million for the third quarter of 2016 and 2015, respectively).

NOTE 13 — OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Acquisition related obligations	$	3,191	$	8,422
Other non-current liabilities	10,599		9,731
Total	$	13,790	$	18,153

NOTE 14 — FAIR VALUE

The following table presents the carrying amount and estimated fair value of financial instruments held by the Company as of September 30, 2016 and December 31, 2015. The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP are as follows:

	September 30, 2016								December 31, 2015
(in thousands)	Carrying amount		Fair value						Carrying amount		Fair value
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	134,948	$	134,948	$	—	$	—	$	179,327	$	179,327	$	—	$	—
Restricted cash	4,505		4,505		—		—		4,801		4,801		—		—
Available for sale securities	45,174		45,174		—		—		—		—		—		—
Liabilities:
Acquisition contingent consideration	2,757		—		—		2,757		3,932		—		—		3,932
Long-term debt	481,140		—		452,272		—		536,598		—		469,523		—

17

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Fair Value Measurements on a Recurring Basis

Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair value due to the short-term nature of these instruments and were measured using Level 1 inputs.

Available for sale securities are carried at fair value and consist of 4.1 million shares of Residential common stock. Available for sale securities are measured using Level 1 inputs as these securities have quoted prices in active markets.

The fair value of our long-term debt is based on quoted market prices. Based on the frequency of trading, we do not believe that there is an active market for our debt. Therefore, the quoted prices are considered Level 2 inputs.

In accordance with ASC Topic 805, Business Combinations, liabilities for contingent consideration are reflected at fair value and adjusted each reporting period with the change in fair value recognized in earnings. Liabilities for acquisition related contingent consideration were recorded in connection with the acquisitions of certain assets and assumption of certain liabilities of Mortgage Builder Software, Inc. and Owners Advantage, LLC in 2014. We measure the liabilities for acquisition related contingent consideration using Level 3 inputs as they are determined based on the present value of future estimated payments, which include sensitivities pertaining to discount rates and financial projections.

During the nine months ended September 30, 2015, we reached an agreement with the former owners of Equator, LLC (“Equator”) to extinguish any liability for the Equator related contingent consideration (“Equator Earn Out”) in exchange for $0.5 million. In connection with this settlement, we reduced the liability for the Equator Earn Out to $0 and recognized a $7.6 million reduction in operating expenses in the condensed consolidated statements of operations and comprehensive income.

There were no transfers between different levels during the periods presented.

NOTE 15 — SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Stock Repurchase Plan

On May 18, 2016, our shareholders approved a new share repurchase program, which replaced the previous share repurchase program. Under the new program, we are authorized to purchase up to 4.6 million shares of our common stock, based on a limit of 25% of the outstanding shares of common stock on the date of approval at a minimum price of $1.00 per share and a maximum price of $500.00 per share. This is in addition to amounts previously purchased under prior programs. Under the existing and prior programs, we purchased 1.3 million shares of common stock at an average price of $26.94 per share during the nine months ended September 30, 2016 and 1.8 million shares at an average price of $27.90 per share during the nine months ended September 30, 2015 (0.5 million shares at an average price of $28.68 per share for the third quarter of 2016 and 0.2 million shares at an average price of $26.88 per share for the third quarter of 2015). As of September 30, 2016, approximately 4.0 million shares of common stock remain available for repurchase under the new program. Our senior secured term loan limits the amount we can spend on share repurchases and may prevent repurchases in certain circumstances. As of September 30, 2016, approximately $379 million was available to repurchase our common stock under our senior secured term loan.

Share-Based Compensation

We issue share-based awards in the form of stock options and certain other equity-based awards for certain employees, officers and directors. We recorded share-based compensation expense of $4.7 million and $3.3 million for the nine months ended September 30, 2016 and 2015, respectively ($1.1 million and $1.9 million for the third quarter of 2016 and 2015, respectively). As of September 30, 2016, estimated unrecognized compensation costs related to share-based awards amounted to $7.3 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.23 years.

Stock Options

Stock option grants are composed of a combination of service-based, market-based and performance-based options.

Service-Based Options. These options generally vest over three or four years with equal annual cliff-vesting and expire on the earlier of ten years after the date of grant or following termination of service. A total of 0.9 million service-based awards were outstanding at September 30, 2016.

Market-Based Options. These option grants generally have two components, each of which vests only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options,

18

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. Market-based awards vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in annual installments. Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement. A total of 1.1 million market-based awards were outstanding at September 30, 2016.

Performance-Based Options. These option grants begin to vest upon the achievement of certain business unit specific financial measures. Generally, 25% of the awards vest upon the achievement of the performance criteria and the remaining 75% vest thereafter in three equal annual installments. The award of performance-based options is adjusted based on the level of achievement specified in the award agreements. If the performance criteria achieved is below a certain threshold, the award is cancelled. The options expire on the earlier of ten years after the date of grant or following termination of service. A total of 0.1 million performance-based awards were outstanding at September 30, 2016.

The Company granted 0.1 million stock options (at a weighted average exercise price of $29.22 per share) and 0.7 million stock options (at a weighted average exercise price of $23.19 per share) during the nine months ended September 30, 2016 and 2015, respectively.

The fair values of the service-based and performance-based options were determined using the Black-Scholes option pricing model and the fair value of the market-based options was determined using a lattice (binomial) model. The following assumptions were used to determine the fair value as of the grant date:

	Nine months ended  September 30, 2016		Nine months ended  September 30, 2015
	Black-Scholes	Binomial	Black-Scholes	Binomial
Risk-free interest rate (%)	1.25 - 1.89	0.23 - 1.97	1.50 - 1.78	0.02 - 2.26
Expected stock price volatility (%)	59.75 - 62.14	59.76 - 62.14	55.06 - 58.58	55.06 - 57.60
Expected dividend yield	—	—	—	—
Expected option life (in years)	6.00 - 6.25	4.54 - 4.88	6.00 - 6.25	4.10 - 4.88
Fair value	$11.15 - $18.60	$11.06 - $19.27	$10.01 - $17.34	$9.91 - $16.13

We determined the expected option life of all service-based stock option grants using the simplified method. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.

The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the period presented:

	Nine months ended September 30,
(in thousands, except per share amounts)	2016		2015
Weighted average grant date fair value of stock options granted per share	$	16.85	$	12.62
Intrinsic value of options exercised	17,280		232
Grant date fair value of stock options that vested	2,372		1,195

19

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes the activity related to our stock options:

	Number of options		Weighted average exercise price		Weighted average contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2015	3,163,125		$	20.13	4.94	$	35,842
Granted	142,654		29.22
Exercised	(1,110,193	)	9.57
Forfeited	(115,539	)	36.53
Outstanding at September 30, 2016	2,080,047		$	25.48	5.55	$	22,595
Exercisable at September 30, 2016	1,274,537		$	20.17	3.62	$	18,372

Other Share-Based Awards

The Company’s other share-based and similar types of awards are composed of restricted shares and, through August 29, 2016, Equity Appreciation Rights (“EAR”). Effective August 29, 2016, the EAR plans were terminated.

The restricted shares are service-based awards that vest over one to four years with either annual cliff-vesting, vesting of all of the restricted shares at the end of the vesting period or vesting beginning after two years of service. The Company granted 13 thousand restricted shares (at a weighted average price of $26.66 per share) during the nine months ended September 30, 2016.

The following table summarizes the activity related to our restricted shares:

	Number of restricted shares
Outstanding at December 31, 2015	272,326
Granted	12,878
Issued	(18,774	)
Forfeited	(15,400	)
Outstanding at September 30, 2016	251,030

Share-based compensation expense for stock options and restricted shares is recorded net of estimated forfeiture rates ranging from 0% to 40%.

NOTE 16 — REVENUE

Revenue includes service revenue, reimbursable expenses and non-controlling interests. Service revenue consists of amounts attributable to our fee-based services. Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services, but we pass such costs directly on to our customers without any additional markup. Non-controlling interests represent the earnings of Lenders One and Wholesale One, consolidated entities not owned by Altisource, and are included in revenue and reduced from net income to arrive at net income attributable to Altisource (see Note 1). The components of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Service revenue	$	239,782	$	245,469	$	715,386	$	689,880
Reimbursable expenses	12,080		26,456		41,317		89,242
Non-controlling interests	883		851		1,973		2,457
Total	$	252,745	$	272,776	$	758,676	$	781,579

20

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 17 — COST OF REVENUE

Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles, fees paid to external providers related to the provision of services, reimbursable expenses, technology and telecommunications costs as well as depreciation and amortization of operating assets. The components of cost of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	66,357	$	62,997	$	201,193	$	197,213
Outside fees and services	77,445		66,952		222,574		175,021
Reimbursable expenses	12,080		26,456		41,317		89,242
Technology and telecommunications	11,502		10,630		32,145		32,878
Depreciation and amortization	6,618		6,815		20,007		20,481
Total	$	174,002	$	173,850	$	517,236	$	514,835

NOTE 18 — SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include payroll and employee benefits associated with personnel employed in executive, finance, law, compliance, human resources, vendor management, risk management, sales and marketing roles. This category also includes occupancy costs, professional fees, marketing costs, depreciation and amortization of non-operating assets and other expenses. The components of selling, general and administrative expenses were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	14,145	$	13,906	$	42,460	$	40,305
Occupancy related costs	8,903		9,808		26,785		30,509
Amortization of intangible assets	11,465		10,118		36,432		27,995
Professional services	4,097		4,008		17,533		18,637
Marketing costs	9,275		7,325		21,438		18,598
Depreciation and amortization	2,557		2,390		7,514		7,156
Other	3,444		3,783		9,547		12,110
Total	$	53,886	$	51,338	$	161,709	$	155,310

NOTE 19 — LOSS ON HLSS EQUITY SECURITIES AND DIVIDENDS RECEIVED

During March 2015, we purchased 1.6 million shares of HLSS common stock in the open market for $30.0 million. This investment was classified as available for sale. On April 6, 2015, HLSS completed the sale of substantially all of its assets to New Residential Investment Corp. (“NRZ”) and adopted a plan of complete liquidation and dissolution. During April 2015, we received liquidating dividends and other dividends from HLSS totaling $20.4 million and we sold all of our 1.6 million shares of HLSS common stock in the open market for $7.7 million. As a result of these transactions, we recognized a net loss of $1.9 million for the nine months endedSeptember 30, 2015 (no comparative amounts in 2016) in connection with our investment in HLSS.

21

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 20 — OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following:

	Three months ended  September 30,						Nine months ended  September 30,
(in thousands)	2016			2015			2016			2015
Gain on early extinguishment of debt	$	—		$	872		$	5,464		$	1,986
Expenses related to the purchase of available for sale securities	—			—			(3,356		)	—
Interest income	11			39			28			101
Other, net	(120		)	(258		)	472			(610		)
Total	$	(109	)	$	653		$	2,608		$	1,477

NOTE 21 — EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities using the treasury stock method.

Basic and diluted EPS are calculated as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands, except per share data)	2016		2015		2016		2015
Net income attributable to Altisource	$	10,589	$	37,046	$	49,077	$	86,694
Weighted average common shares outstanding, basic	18,715		19,091		18,669		19,608
Dilutive effect of stock options and restricted shares	853		1,320		1,069		1,080
Weighted average common shares outstanding, diluted	19,568		20,411		19,738		20,688
Earnings per share:
Basic	$	0.57	$	1.94	$	2.63	$	4.42
Diluted	$	0.54	$	1.82	$	2.49	$	4.19

For the nine months ended September 30, 2016 and 2015, 0.4 million options and 0.6 million options, respectively, that were anti-dilutive have been excluded from the computation of diluted EPS (0.4 million options and 0.4 million options for the third quarter of 2016 and 2015, respectively). These options were anti-dilutive and excluded from the computation of diluted EPS because their exercise price was greater than the average market price of our common stock. Also excluded from the computation of diluted EPS are 0.4 million options and 0.3 million options for the nine months ended September 30, 2016 and 2015, respectively (0.4 million and 0.3 million options for the third quarter of 2016 and 2015, respectively), granted for shares that begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and an annualized rate of return to shareholders that have not yet been met.

NOTE 22 — COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

Litigation

From time to time, we are involved in legal and administrative proceedings arising in the course of our business. We record a liability for these matters if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range.

On September 8, 2014, the West Palm Beach Firefighters’ Pension Fund filed a putative securities class action suit against Altisource Portfolio Solutions S.A. and certain of its current or former officers and directors in the United States District Court for the Southern District of Florida alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 with regard to disclosures concerning

22

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

pricing and transactions with related parties that allegedly inflated Altisource Portfolio Solutions S.A. share prices. The Court subsequently appointed the Pension Fund for the International Union of Painters and Allied Trades District Council 35 and the Annuity Fund for the International Union of Painters and Allied Trades District Council 35 as Lead Plaintiffs. On January 30, 2015, Lead Plaintiffs filed an amended class action complaint which added Ocwen Financial Corporation as a defendant, and seeks a determination that the action may be maintained as a class action on behalf of purchasers of Altisource Portfolio Solutions S.A. securities between April 25, 2013 and December 21, 2014 and an unspecified amount of damages. Altisource Portfolio Solutions S.A. moved to dismiss the suit on March 23, 2015. On September 4, 2015, the Court granted the defendants’ motion to dismiss, finding that the Lead Plaintiffs’ amended complaint failed to state a claim as to any of the defendants, but permitting the Lead Plaintiffs to file another amended complaint. Lead Plaintiffs subsequently filed second and third amended complaints with substantially similar claims and theories. Altisource Portfolio Solutions S.A. moved to dismiss the third amended complaint on October 22, 2015. On December 22, 2015, the Court issued an order dismissing with prejudice all claims against Ocwen Financial Corporation and certain claims against Altisource Portfolio Solutions S.A. and the officer and director defendants, but denying the motion to dismiss as to other claims. Altisource Portfolio Solutions S.A. intends to continue to vigorously defend this suit.

On February 11, 2015, W.A. Sokolowski, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the United States District Court for the Southern District of Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duty by Ocwen Financial Corporation’s officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. Altisource Portfolio Solutions S.A. filed a motion to dismiss the complaint on November 9, 2015. While that motion was pending, additional lawsuits alleging similar claims for alleged breaches of fiduciary duties by current or former Ocwen Financial Corporation officers and directors were filed in or transferred to the Court. The Court subsequently consolidated these actions and denied Altisource Portfolio Solutions S.A.’s motion to dismiss the Sokolowski complaint without prejudice to re-file following appointment of lead counsel for the consolidated action and the filing or designation of an operative complaint. Lead counsel for plaintiffs filed their Consolidated Verified Shareholder Derivative Complaint (the “Consolidated Complaint”) on March 8, 2016. The Consolidated Complaint alleges claims that Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants aided and abetted alleged breaches of fiduciary duties by Ocwen Financial Corporation officers and directors and/or were unjustly enriched in connection with business dealings with Ocwen Financial Corporation. The Consolidated Complaint also seeks contribution from Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants for amounts Ocwen Financial Corporation paid in connection with a settlement with the New York State Department of Financial Services. Altisource Portfolio Solutions S.A. and Beltline Road Insurance Agency, Inc. filed motions to dismiss the Consolidated Complaint on May 13, 2016 and intend to vigorously defend the lawsuit. The Court disclosed that the parties reached a settlement in a settlement conference on October 13, 2016. The Court docket provides that a Stipulation of Settlement is due on or before November 18, 2016, and a Final Approval Hearing will be held before the Court on January 18, 2017.

On March 26, 2015, Robert Moncavage, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duties by the current or former Ocwen Financial Corporation officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. On November 9, 2015, the Court entered an order staying all proceedings in the case pending further order of the Court. If the litigation proceeds, Altisource Portfolio Solutions S.A. intends to vigorously defend the lawsuit and to move to dismiss all claims against it.

Altisource is unable to predict the outcomes of these lawsuits or reasonably estimate the potential loss, if any, arising from the suits, given that the motion to dismiss in the second case has not been adjudicated, a stay has been entered in the third case and significant legal and factual issues remain to be determined in all three cases.

In addition to the matters referenced above, we are involved in legal actions in the course of our business, some of which seek monetary damages. We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows.

Regulatory Matters

Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority. We are currently responding to such inquiries from governmental authorities

23

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

relating to certain aspects of our business. We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with these inquiries.

Ocwen Related Matters

Ocwen is our largest customer and 56% of our revenue for the nine months ended September 30, 2016 (56% of revenue for the third quarter of 2016) was from Ocwen. Additionally, 19% of our revenue for the nine months ended September 30, 2016 (19% of revenue for the third quarter of 2016) was earned on the portfolios serviced by Ocwen, when a party other than Ocwen selected Altisource as the service provider.

Ocwen has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, requests for information and other actions and is subject to pending legal proceedings that have or could result in adverse regulatory or other actions against Ocwen. While not all inclusive, regulatory actions to date have included subjecting Ocwen to independent oversight of its operations and placing certain restrictions on its ability to acquire servicing rights. Ocwen may become subject to future federal and state regulatory investigations, inquiries, requests for information and legal proceedings, any of which could also result in adverse regulatory or other actions against Ocwen.

As a result of the sale of substantially all of the assets of HLSS to NRZ in April of 2015, NRZ owned the rights to approximately 78% of Ocwen’s non-government-sponsored enterprise (“non-GSE”) servicing rights as of June 30, 2016. Under an agreement between NRZ and Ocwen, NRZ has the right (not necessarily the obligation or ability) to transfer servicing away from Ocwen if Ocwen does not maintain certain minimum servicer ratings on or after April 6, 2017.

Any or all of the foregoing may have significant adverse effects on Ocwen’s business and our continuing relationships with Ocwen. For example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services (including information technology and software services), it may be required to seek changes to its existing pricing structure with us, it may lose or sell some or all of its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing licenses. Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Ocwen’s business that could require it to sell assets or change its business operations. Any or all of these effects could result in our eventual loss of Ocwen as a customer or a reduction in the number and/or volume of services they purchase from us or the loss of other customers.

If any of the following events occurred, Altisource’s revenue would be significantly lower and our results of operations would be materially adversely affected, including from the possible impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable:

• Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us

• Ocwen loses or sells a significant portion or all of its non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

• Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio

• Altisource fails to be retained as a service provider

• The contractual relationship between Ocwen and Altisource changes significantly or there are significant changes to our pricing to Ocwen for services from which we generate material revenue

Management cannot predict the outcome of the above Ocwen related matters or the impact they may have on Altisource. However, in the event these Ocwen related matters materially negatively impact Altisource, we believe the impact to Altisource would occur over an extended period of time and the variable nature of our cost structure would allow us to realign our cost structure in line with remaining revenue.

In this regard, we have a plan that we believe would allow us to efficiently execute on this realignment. We believe that transfers of Ocwen’s servicing rights to a successor servicer(s) would take an extended period of time because of the approval required from many parties, including regulators, rating agencies, RMBS trustees, lenders and others. During this period of time, we believe we would continue to generate revenue from the services we provide to the transferred portfolio. Additionally, we have several strategic initiatives that focus on diversifying and growing our revenue and customer base. Our major strategic initiatives include growing our:

• Servicer Solutions business

• Origination Solutions business

• Consumer Real Estate Solutions business

• Real Estate Investor Solutions business

24

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

We have an established sales and marketing strategy to support each of these initiatives.

Management believes our plans, together with current liquidity and cash flows from operations will be sufficient to meet working capital, capital expenditures, debt service and other cash needs. However, there can be no assurance that our plans will be successful or our operations will be profitable.

Escrow and Trust Balances

We hold customers’ assets in escrow and trust accounts at various financial institutions pending completion of certain real estate activities. We also hold cash in trust accounts at various financial institutions where contractual obligations mandate maintaining dedicated bank accounts for our Financial Services segment’s collections. These amounts are held in escrow and trust accounts for limited periods of time and are not included in the condensed consolidated balance sheets. Amounts held in escrow and trust accounts were $65.6 million and $66.6 million at September 30, 2016 and December 31, 2015, respectively.

NOTE 23 — SEGMENT REPORTING

Our business segments are based upon our organizational structure, which focuses primarily on the services offered, and are consistent with the internal reporting used by our Chief Executive Officer (our Chief Operating Decision Maker) to evaluate operating performance and to assess the allocation of our resources.

We classify our businesses into three reportable segments. The Mortgage Services segment provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies that span the mortgage and real estate lifecycle. The Financial Services segment provides collection and customer relationship management services primarily to debt originators and servicers (e.g., credit card, auto lending, retail credit and mortgage) and the utility, insurance and hotel industries. The Technology Services segmentprovides software and data analytics solutions that support the management of mortgage and real estate activities and marketplace transactions across the mortgage and real estate lifecycles and information technology infrastructure management services. In addition, Corporate Items and Eliminations include eliminations of transactions between the reportable segments, interest expense and costs related to corporate support functions including executive, finance, law, compliance, human resources, vendor management, risk management and sales and marketing costs not allocated to the business units. Intercompany transactions primarily consist of information technology infrastructure management services.

Financial information for our segments is as follows:

	Three months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	204,696	$	17,599	$	41,544		$	(11,094	)	$	252,745
Cost of revenue	132,399		13,238		38,557			(10,192		)	174,002
Gross profit (loss)	72,297		4,361		2,987			(902		)	78,743
Selling, general and administrative expenses	27,543		4,002		6,115			16,226			53,886
Income (loss) from operations	44,754		359		(3,128		)	(17,128		)	24,857
Total other income (expense), net	8		28		1			(6,098		)	(6,061		)
Income (loss) before income taxes and non-controlling interests	$	44,762	$	387	$	(3,127	)	$	(23,226	)	$	18,796

25

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

	Three months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	209,506	$	21,337	$	51,437		$	(9,504	)	$	272,776
Cost of revenue	122,724		15,418		44,419			(8,711		)	173,850
Gross profit (loss)	86,782		5,919		7,018			(793		)	98,926
Selling, general and administrative expenses	23,399		4,553		7,628			15,758			51,338
Income (loss) from operations	63,383		1,366		(610		)	(16,551		)	47,588
Total other income (expense), net	9		31		38			(6,466		)	(6,388		)
Income (loss) before income taxes and non-controlling interests	$	63,392	$	1,397	$	(572	)	$	(23,017	)	$	41,200

	Nine months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	612,243	$	57,461	$	120,291		$	(31,319	)	$	758,676
Cost of revenue	381,543		41,645		122,874			(28,826		)	517,236
Gross profit (loss)	230,700		15,816		(2,583		)	(2,493		)	241,440
Selling, general and administrative expenses	83,119		12,515		20,113			45,962			161,709
Income (loss) from operations	147,581		3,301		(22,696		)	(48,455		)	79,731
Total other income (expense), net	57		63		101			(16,094		)	(15,873		)
Income (loss) before income taxes and non-controlling interests	$	147,638	$	3,364	$	(22,595	)	$	(64,549	)	$	63,858

	Nine months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	583,873	$	67,080	$	159,399		$	(28,773	)	$	781,579
Cost of revenue	350,238		46,058		144,565			(26,026		)	514,835
Gross profit (loss)	233,635		21,022		14,834			(2,747		)	266,744
Selling, general and administrative expenses	69,188		13,856		22,189			50,077			155,310
Change in the fair value of Equator Earn Out	—		—		(7,591		)	—			(7,591		)
Income (loss) from operations	164,447		7,166		236			(52,824		)	119,025
Total other income (expense), net	28		21		21			(21,843		)	(21,773		)
Income (loss) before income taxes and non-controlling interests	$	164,475	$	7,187	$	257		$	(74,667	)	$	97,252

(in thousands)	Mortgage Services		Financial Services		Technology Services		Corporate Items and Eliminations		Consolidated Altisource
Total assets:
September 30, 2016	$	315,384	$	44,652	$	141,846	$	191,450	$	693,332
December 31, 2015	325,461		53,757		151,969		190,611		721,798

26

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Our services are provided to customers primarily located in the United States. Premises and equipment, net consist of the following, by country:

(in thousands)	September 30, 2016		December 31, 2015
United States	$	76,683	$	85,021
India	15,705		21,187
Luxembourg	14,372		9,944
Philippines	2,776		2,664
Uruguay	249		305
Total	$	109,785	$	119,121

27

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is a supplement to the accompanying interim condensed consolidated financial statements and is intended to provide a reader of our financial statements with a narrative from the perspective of management on our businesses, current developments, financial condition, results of operations and liquidity. Our MD&A should be read in conjunction with our Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (“SEC”) on March 15, 2016.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q regarding anticipated financial outcomes, business and market conditions, outlook and other similar statements related to Altisource’s future financial and operational performance are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of terminology such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “believe,” “predict,” “potential” or “continue” or the negative of these terms and other comparable terminology. Forward-looking statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. The following are examples of such items and are not intended to be all inclusive:

• assumptions related to the sources of liquidity and the adequacy of financial resources;

• assumptions about our ability to grow our business, including executing on our strategic initiatives;

• assumptions about our ability to improve margins;

• expectations regarding collection rates and placements in our Financial Services segment;

• assumptions regarding the impact of seasonality;

• estimates regarding the calculation of our effective tax rate; and

• estimates regarding our reserves and valuations.

Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2015 and include the following:

• if, as a result of difficulties faced by Ocwen Financial Corporation and its subsidiaries (“Ocwen”), we were to lose Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us;

• our ability to execute on our strategic initiatives;

• our ability to retain our existing customers, expand relationships and attract new customers;

• the level of loan delinquencies and charge-offs;

• the level of origination volume;

• technology failures;

• the trend toward outsourcing;

• our ability to raise debt;

• our ability to retain our directors, executive officers and key personnel;

• our ability to integrate acquired businesses;

• our ability to comply with and burdens imposed by governmental regulations and policies and any changes in such regulations and policies; and

• significant changes in the Luxembourg tax regime or interpretations of the Luxembourg tax regime.

We caution you not to place undue reliance on these forward-looking statements as they reflect our view only as of the date of this report. We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

28

OVERVIEW

Our Business

When we refer to “Altisource,” the “Company,” “we,” “us” or “our” we mean Altisource Portfolio Solutions S.A., a Luxembourg société anonyme, or public limited liability company, and its subsidiaries.

We are a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. Altisource’s proprietary business processes, vendor and electronic payment management software and behavioral science-based analytics improve outcomes for marketplace participants.

We classify our businesses into the following three reportable segments:

Mortgage Services:Provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies that span the mortgage and real estate lifecycle. Within the Mortgage Services segment, we provide:

Asset Management Services - the products, services and technologies typically used or licensed by loan servicers, rental property investors and real estate consumers to purchase, preserve, renovate, lease, manage, sell and auction single family residential real estate.

Origination Services- the products, solutions and services typically used or licensed by loan originators (or other similar mortgage market participants) in producing residential mortgages. Altisource also manages Best Partners Mortgage Cooperative, Inc., a mortgage cooperative doing business as Lenders One^® (“Lenders One”), for mortgage originators that provides its members with networking opportunities, industry related education and cost effective services and tools to help them increase revenue and improve profitability.

Insurance Services- origination and default related title insurance and settlement services for institutions and consumers, certified loan insurance and certification products to protect mortgage market participants against loses caused by mortgage underwriting defects, and residential and commercial loan and insurance claim disbursement processing, risk mitigation and construction inspection services.

Property Valuation Services - traditional appraisal management services and a variety of broker and non-broker valuation products to support mortgage originators, loan servicers, rental property investors and consumers.

Default Management Services - foreclosure trustee services for loan servicers and non-legal processing and related services for and under the supervision of foreclosure, bankruptcy and eviction attorneys.

Financial Services: Provides collection and customer relationship management services primarily to debt originators and servicers (e.g., credit card, auto lending, retail credit and mortgage) and the utility, insurance and hotel industries. Within the Financial Services segment, we provide the following services:

Asset recovery management - asset recovery management principally includes post-charge-off debt collection services on a contingency fee basis.

Customer relationship management - customer relationship management principally includes customer care, technical support and early stage collections services as well as insurance call center services and administrative support.

Technology Services:Provides software and data analytics solutions that support the management of mortgage and real estate activities and marketplace transactions across the mortgage and real estate lifecycles and information technology (“IT”) infrastructure management services. Within the Technology Services segment, we provide:

Software Services - software and data analytics solutions that facilitate process automation, rules management, controls enforcement, data security, marketplace enablement and analytics-driven outcomes across the real estate and mortgage lifecycle. We provide these capabilities primarily as software-as-a-service (or SaaS) to our customers and as enabling technologies to other Altisource business segments through a shared services model. Our servicer technologies include residential and commercial loan servicing, loss mitigation (loan modification, short sales, deed-in-lieu) and default servicing (real estate owned (“REO”), foreclosure, bankruptcy, eviction). Our origination technologies include a loan origination system, a borrower application portal, an underwriting and quality control solution and a secondary loan trading platform. Our marketplace enabling technologies include patented vendor management, marketplace transaction management and payment management platforms, a document management platform and a data analytics delivery platform.

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IT Infrastructure Services - IT management services including, among others, desktop support, data center support, network management, telephony services, application management and IT security. Some or all of these services are provided to Ocwen, Altisource Residential Corporation (“Residential”) and Altisource Asset Management Corporation through services agreements, and to other Altisource business segments through a shared services model.

Corporate Items and Eliminations: Includes interest expense and costs related to corporate support functions including executive, finance, law, compliance, human resources, vendor management, risk management and sales and marketing costs not allocated to the business units, and also includes eliminations of transactions between the reportable segments. Corporate Items and Eliminations also include the cost of certain facilities.

We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue. Service revenue consists of amounts attributable to our fee-based services. Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services, but we pass such costs directly on to our customers without any additional markup. Non-controlling interests represent the earnings of Lenders One and Best Partners Mortgage Brokers Cooperative, Inc., a mortgage cooperative doing business as Wholesale One^®, consolidated entities not owned by Altisource, and are included in revenue and reduced from net income to arrive at net income attributable to Altisource.

Stock Repurchase Plan

On May 18, 2016, our shareholders approved a new share repurchase program, which replaced the previous share repurchase program. Under the new program, we are authorized to purchase up to 4.6 million shares of our common stock, based on a limit of 25% of the outstanding shares of common stock on the date of approval at a minimum price of $1.00 per share and a maximum price of $500.00 per share. This is in addition to amounts previously purchased under prior programs. Under the existing and prior programs, we purchased 1.3 million shares of common stock at an average price of $26.94 per share during the nine months ended September 30, 2016 and 1.8 million shares at an average price of $27.90 per share during the nine months ended September 30, 2015 (0.5 million shares at an average price of $28.68 per share for the third quarter of 2016 and 0.2 million shares at an average price of $26.88 per share for the third quarter of 2015). As of September 30, 2016, approximately 4.0 million shares of common stock remain available for repurchase under the new program. Our senior secured term loan limits the amount we can spend on share repurchases and may prevent repurchases in certain circumstances. As of September 30, 2016, approximately $379 million was available to repurchase our common stock under our senior secured term loan.

Strategy and Growth Initiatives

Altisource provides a suite of mortgage, real estate and consumer debt services, leveraging our technology platform and global operations. Altisource is focused on becoming one of the premier providers of mortgage and real estate marketplaces and related services to a broad and diversified customer base. Within the mortgage and real estate markets, we facilitate transactions and provide products, solutions and services related to home sales, home purchases, home rentals, home maintenance, mortgage origination and mortgage servicing.

Strategically, we are focused on (1) our four key business initiatives discussed below, (2) continuing to strengthen our compliance management system and (3) maintaining strong performance and relationships with our strategic customers.

Each of our four key business initiatives positions Altisource to grow and diversify our customer and revenue base. We believe these initiatives address very large markets and directly leverage our core competencies and distinct competitive advantages. Our four strategic initiatives and a brief description of each follow:

Mortgage market:

Grow our Servicer Solutions business (the products, services and technologies typically used or licensed by loan servicers): We are focused on growing referrals from our existing customer base, expanding the service and proprietary technology offerings to our customer base, and attracting new customers to our offerings. Even as loan delinquencies return to historical norms, we believe there is a very large addressable market for our offerings. We are one of only a few providers with a broad suite of servicer solutions, nationwide coverage and demonstrated scalability. We believe we are well positioned to gain market share as customers consolidate to larger, full-service providers and outsource services that have historically been performed in-house.

Grow our Origination Solutions business (the products, services, solutions and technologies typically used or licensed by loan originators or other similar mortgage market participants): We are focused on continuing to build an industry leading, fully-integrated origination solutions platform leveraging our industry expertise and proprietary technologies. We have a strong customer base that includes Lenders One members and Mortgage Builder, Trelix (formerly known as Altisource Origination Solutions) and CastleLine customers. Our platform allows us to leverage referrals from our existing customer base, expand the quality and the

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character of our offerings and attract new customers. We believe we are well positioned to grow and gain market share as customers continue to utilize larger, full-service providers to outsource services and solutions that had historically been performed in-house.

Real estate market:

Grow our Consumer Real Estate Solutions business (a marketplace that connects home buyers and home sellers and offers the related services) primarily through Owners.com: Capitalizing on our core competencies in realty services, we have entered the consumer market by targeting the growing segment of self-directed consumers. This segment wants to self-manage part of the realty process, but still needs brokerage services to complete the transaction. Through our Owners.com brand, we are empowering consumers to perform certain tasks on their own such as searching for properties and listing and showing their own homes for sale, while offering the necessary realty services to complete the transaction with significant savings. We believe our right-sized offering and compelling savings value proposition is being well received by our target market and we are well positioned to become the market leader for the self-directed real estate consumer.

Grow our Real Estate Investor Solutions business (a marketplace that connects home buyers and home sellers of single-family-rental homes and offers the related services to buy, renovate, manage and sell homes): We are focused on supporting the growth of our existing customers, expanding the offerings to our customer base and attracting new customers to our offerings. The single-family-rental market is large, geographically distributed with fragmented ownership. Our nationwide acquisition, renovation, property management, leasing and dispositions platform provides a strong value proposition for institutional and retail investors and positions us well for long term growth.

There can be no assurance that growth from our strategic initiatives will be successful or our operations will be profitable.

Ocwen Related Matters

Revenue from Ocwen represented 56% of our revenue for the nine months ended September 30, 2016 (56% of revenue for the third quarter of 2016). Additionally, 19% of our revenue for the nine months ended September 30, 2016 (19% of revenue for the third quarter of 2016) was earned on the portfolios serviced by Ocwen, when a party other than Ocwen selected Altisource as the service provider.

Ocwen has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, requests for information and other actions and is subject to pending legal proceedings that have or could result in adverse regulatory or other actions against Ocwen. While not all inclusive, regulatory actions to date have included subjecting Ocwen to independent oversight of its operations and placing certain restrictions on its ability to acquire servicing rights. Ocwen may become subject to future federal and state regulatory investigations, inquiries, requests for information and legal proceedings, any of which could also result in adverse regulatory or other actions against Ocwen (see Note 22 to the condensed consolidated financial statements). Management cannot predict the outcome of these Ocwen related matters or the impact they may have on Altisource. However, in the event these Ocwen related matters materially negatively impact Altisource, we believe the impact to Altisource would occur over an extended period of time and the variable nature of our cost structure would allow us to realign our cost structure in line with remaining revenue.

In this regard, we have a plan that we believe would allow us to efficiently execute on this realignment. We believe that transfers of Ocwen’s servicing rights to a successor servicer(s) would take an extended period of time because of the approval required from many parties, including regulators, rating agencies, residential mortgage-backed securities trustees, lenders and others. During this period of time, we believe we would continue to generate revenue from the services we provide to the transferred portfolio. Additionally, we have several strategic initiatives that focus on diversifying and growing our revenue and customer base. Our major strategic initiatives are described in the Strategy and Growth Initiatives section above. We have an established sales and marketing strategy to support each of these initiatives.

Management believes our plans, together with current liquidity and cash flows from operations will be sufficient to meet working capital, capital expenditures, debt service and other cash needs. However, there can be no assurance that our plans will be successful or our operations will be profitable.

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Factors Affecting Comparability

The following items may impact the comparability of our results:

• The average number of loans serviced by Ocwen on REALServicing was 1.5 million for the nine months ended September 30, 2016 compared to 2.2 million for the nine months ended September 30, 2015, a decrease of 32% (1.4 million for the third quarter of 2016 and 1.9 million for the third quarter of 2015, a decrease of 26%). The average number of delinquent non-government-sponsored enterprise loans serviced by Ocwen on REALServicing was 224 thousand for the nine months ended September 30, 2016 compared to 286 thousand for the nine months ended September 30, 2015, a decrease of 22% (211 thousand for the third quarter of 2016 and 269 thousand for the third quarter of 2015, a decrease of 22%);

• During the nine months ended September 30, 2016 and 2015, we repurchased portions of our senior secured term loan with aggregate par values of $51.0 million and $27.0 million, respectively, ($0 and $11.0 million for the third quarter of 2016 and 2015, respectively) recognizing net gains on the early extinguishment of debt of $5.5 million and $2.0 million, respectively ($0 and $0.9 million for the third quarter of 2016 and 2015, respectively);

• During the nine months ended September 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million, incurred expenses of $3.4 million and earned dividends of $1.0 million related to this investment (no comparative amounts in 2015);

• On July 29, 2016, we acquired certain assets and assumed certain liabilities of Granite Loan Management of Delaware, LLC (“Granite”) for $9.6 million in cash at closing;

• On October 9, 2015, we acquired GoldenGator, LLC (doing business as RentRange^®) (“RentRange”), REIsmart, LLC (doing business as Investability^™) (“Investability”) and Onit Solutions, LLC, a support company for RentRange and Investability, for $24.8 million, composed of $17.5 million in cash and 247 thousand shares of restricted common stock of the Company with a value of $7.3 million as of the closing date;

• On July 17, 2015, we acquired CastleLine Holdings, LLC and its subsidiaries (“CastleLine”) for $33.4 million. The purchase consideration was composed of $12.3 million of cash at closing, $10.5 million of cash payable over four years from the acquisition date and 495 thousand shares of restricted common stock of the Company with a value of $14.4 million as of the closing date. Of the cash payable following acquisition, $3.8 million is contingent on certain future employment conditions of certain of the sellers, and therefore excluded from the purchase price;

• During the nine months ended September 30, 2015, we paid the former owners of Equator, LLC (“Equator”) $0.5 million to extinguish any liability for Equator related contingent consideration (“Equator Earn Out”). In connection with this settlement, we reduced the liability for the Equator Earn Out to $0 and recognized a $7.6 million increase in earnings;

• During the nine month ended September 30, 2015, we recognized a loss on the sale of equity securities of Home Loan Servicing Solutions, Ltd. (“HLSS”), net of dividends received, of $1.9 million;

• Effective March 31, 2015, we terminated the Data Access and Services Agreement with Ocwen; and

• The effective income tax rate increased to 20.1% for the nine months ended September 30, 2016 and 39.0% for the third quarter of 2016 from an increase in our expected 2016 effective tax rate and adjustments to true-up the tax provision from prior quarters. The effective tax rate increase was primarily due to lower pretax income margins, which changed the expected mix of taxable income across the jurisdictions in which we operate.

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CONSOLIDATED RESULTS OF OPERATIONS

Summary Consolidated Results

The following is a discussion of our consolidated results of operations for the periods indicated. For a more detailed discussion of the factors that affected the results of our business segments in these periods, see “Segment Results of Operations” below.

The following table sets forth information regarding our results of operations:

	Three months ended September 30,								Nine months ended September 30,
(in thousands, except per share data)	2016			2015			% Increase (decrease)		2016			2015			% Increase (decrease)
Service revenue
Mortgage Services	$	191,766		$	182,222		5		$	569,038		$	492,277		16
Financial Services	17,566			21,314			(18	)	57,376			66,977			(14	)
Technology Services	41,544			51,437			(19	)	120,291			159,399			(25	)
Eliminations	(11,094		)	(9,504		)	17		(31,319		)	(28,773		)	9
Total service revenue	239,782			245,469			(2	)	715,386			689,880			4
Reimbursable expenses	12,080			26,456			(54	)	41,317			89,242			(54	)
Non-controlling interests	883			851			4		1,973			2,457			(20	)
Total revenue	252,745			272,776			(7	)	758,676			781,579			(3	)
Cost of revenue	174,002			173,850			—		517,236			514,835			—
Gross profit	78,743			98,926			(20	)	241,440			266,744			(9	)
Selling, general and administrative expenses	53,886			51,338			5		161,709			155,310			4
Change in the fair value of Equator Earn Out	—			—			—		—			(7,591		)	(100	)
Income from operations	24,857			47,588			(48	)	79,731			119,025			(33	)
Other income (expense), net:
Interest expense	(5,952		)	(7,041		)	(15	)	(18,481		)	(21,396		)	(14	)
Loss on HLSS equity securities and dividends received, net	—			—			—		—			(1,854		)	(100	)
Other income (expense), net	(109		)	653			(117	)	2,608			1,477			77
Total other income (expense), net	(6,061		)	(6,388		)	(5	)	(15,873		)	(21,773		)	(27	)
Income before income taxes and non-controlling interests	18,796			41,200			(54	)	63,858			97,252			(34	)
Income tax provision	(7,324		)	(3,303		)	122		(12,808		)	(8,101		)	58
Net income	11,472			37,897			(70	)	51,050			89,151			(43	)
Net income attributable to non-controlling interests	(883		)	(851		)	4		(1,973		)	(2,457		)	(20	)
Net income attributable to Altisource	$	10,589		$	37,046		(71	)	$	49,077		$	86,694		(43	)
Margins:
Gross profit/service revenue	33		%	40		%			34		%	39		%
Income from operations/service revenue	10		%	19		%			11		%	17		%
Earnings per share:
Basic	$	0.57		$	1.94		(71	)	$	2.63		$	4.42		(40	)
Diluted	$	0.54		$	1.82		(70	)	$	2.49		$	4.19		(41	)

Revenue

We recognized service revenue of $715.4 million for the nine months ended September 30, 2016, a 4%increase compared to the nine months ended September 30, 2015 ($239.8 million for the third quarter of 2016, a 2%decrease compared to the third quarter of 2015).

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The increase in service revenue for the nine months ended September 30, 2016 was primarily driven by revenue growth in the asset management services businesses from higher volumes of property preservation referrals, growth in the percentage of homes sold through auction on Hubzu and growth in the number of non-Ocwen properties sold on Hubzu in the Mortgage Services segment. This increase was partially offset by decreases in IT infrastructure services in the Technology Services segment, which are typically billed on a cost plus basis, due to the transition of resources supporting Ocwen’s technology infrastructure to Ocwen, decreases in software services revenue due to lower rates charged to Ocwen for certain services and a decline in the number of loans on REALServicing in the Technology Services segment and lower customer relationship management business as we have severed relationships with and reduced the volume of services provided to certain clients that were not profitable to us and we experienced a reduction in volume from the transition of services from one customer to another. During the fourth quarter of 2015, we began transitioning resources supporting technology infrastructure to Ocwen as a part of the previously announced separation of technology infrastructure. We anticipate this transition will be largely complete by December 31, 2016. In addition, in early 2015, the pricing model to Ocwen for REO preservation services within asset management services changed. Historically, we billed (1) a fixed fee per REO asset (which was recognized as service revenue) and (2) actual vendor costs (which were recognized as reimbursable expenses revenue). Beginning in early 2015, our pricing for new Ocwen REO referrals is on a per service basis (which is recognized as service revenue). This change results in certain services that were historically reimbursable expenses revenue becoming service revenue. As a result, service revenue in the Mortgage Services segment asset management services businesses increased and reimbursable expenses revenue decreased.

Service revenue declined by 2% in the third quarter of 2016 as the revenue growth from non-Ocwen customers and higher property preservation referrals from Ocwen largely offset the expected loss in revenue from Ocwen’s declining portfolio and lower delinquencies in addition to lower customer relationship management revenue, as described above.

Certain of our revenues are impacted by seasonality. More specifically, Mortgage Services’ revenue is impacted by REO sales and lawn maintenance, which tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months. Financial Services’ asset recovery management revenue tends to be higher in the first quarter, as borrowers may utilize tax refunds and bonuses to pay debts, and generally declines throughout the rest of the year.

Cost of Revenue and Gross Profit

Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles, fees paid to external providers related to the provision of services, reimbursable expenses, technology and telecommunications costs and depreciation and amortization of operating assets.

We recognized cost of revenue of $517.2 million for the nine months ended September 30, 2016, a slight increase compared to the nine months ended September 30, 2015 ($174.0 million for the third quarter of 2016, a slight increase compared to the third quarter of 2015). The increases were primarily driven by higher outside fees and services, largely offset by decreases in reimbursable expenses. Outside fees and services increased due to higher volumes of property preservation referrals and the change in billing discussed in the revenue section above, partially offset for the nine months ended September 30, 2016 by the March 31, 2015 termination of the Data Access and Services Agreement. Reimbursable expenses declined as a result of the change in billing discussed in the revenue section above. Compensation and benefits costs increased, particularly in the second and third quarters of 2016, from our investments to support certain of our growth initiatives in the Mortgage Services segment, partially offset by cost savings initiatives and the transition of resources supporting technology infrastructure to Ocwen.

Gross profit decreased to $241.4 million, representing 34% of service revenue, for the nine months ended September 30, 2016 compared to $266.7 million, representing 39% of service revenue, for the nine months ended September 30, 2015 (decreased to $78.7 million, representing 33% of service revenue, for the third quarter of 2016 compared to $98.9 million, representing 40% of service revenue, for the third quarter of 2015). Gross profit as a percentage of service revenue decreased primarily due to higher growth in the lower margin property preservation services, higher compensation and benefits costs in the Mortgage Services segment to support our growth initiatives and reductions in volumes and prices in the Technology Services segment that exceeded the decline in costs. The decrease for the nine months ended September 30, 2016 was partially offset by the March 31, 2015 termination of the Data Access and Services Agreement with Ocwen.

Selling, General and Administrative Expenses, Other Operating Expenses and Income from Operations

Selling, general and administrative expenses (“SG&A”) include payroll for personnel employed in executive, finance, law, compliance, human resources, vendor management, risk management, sales and marketing roles. This category also includes occupancy costs, amortization of intangible assets, professional services, marketing costs and depreciation and amortization.

We recognized SG&A of $161.7 million for the nine months ended September 30, 2016, a 4%increase compared to the nine months ended September 30, 2015 ($53.9 million for the third quarter of 2016, a 5%increase compared to the third quarter of

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2015). The increases were primarily due to higher amortization of intangible assets and an increase in marketing costs, primarily related to Owners.com, as we launched our buy side brokerage marketing campaign in 2016, partially offset by lower occupancy costs due to the completion of several office relocations in 2015.

We recognized a gain in other operating expenses on the change in the fair value of the Equator Earn Out of $7.6 million for the nine months ended September 30, 2015. The liability for contingent consideration was reflected at fair value and adjusted each reporting period with the change in fair value recognized in earnings. In 2015, we reached an agreement with the former owners of Equator to extinguish any liability for the Equator Earn Out. In connection with this settlement, we reduced the liability for the Equator Earn Out to $0 and recognized a $7.6 million increase in earnings.

Income from operations decreased to $79.7 million, representing 11% of service revenue, for the nine months ended September 30, 2016 compared to $119.0 million, representing 17% of service revenue, for the nine months ended September 30, 2015 (decreased to $24.9 million, representing 10% of service revenue, for the third quarter of 2016 compared to $47.6 million, representing 19% of service revenue, for the third quarter of 2015). The decreases in operating income margin were primarily the result of decreases in gross profit margin, higher SG&A expenses and the 2015 Equator Earn Out gain, as discussed above.

Other Income (Expense), net

Other income (expense), net principally includes interest expense and other non-operating gains and losses. Interest expense was $18.5 million for the nine months ended September 30, 2016, a decrease of $2.9 million compared to the nine months ended September 30, 2015 ($6.0 million for the third quarter of 2016, a decrease of $1.1 million compared to the third quarter of 2015), primarily from the 2016 and 2015 repurchases of portions of our senior secured term loan with an aggregate par value of $100.0 million.

During the nine months ended September 30, 2016, we repurchased portions of our senior secured term loan with an aggregate par value of $51.0 million at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt (no repurchases in the third quarter of 2016). During the nine months ended September 30, 2015, we repurchased portions of our senior secured term loan with an aggregate par value of $27.0 million at a weighted average discount of 9.8%, recognizing a net gain of $2.0 million on the early extinguishment of debt (repurchased aggregate par value of $11.0 million at a weighted average discount of 11.0%, recognizing a net gain of $0.9 million on the early extinguishment of debt for the third quarter of 2015).

During the nine months endedSeptember 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million, incurred expenses of $3.4 million and earned dividends of $1.0 million related to this investment (no comparative amounts in 2015).

During March 2015, we purchased 1.6 million shares of HLSS common stock in the open market for $30.0 million. On April 6, 2015, HLSS completed the sale of substantially all of its assets to New Residential Investment Corp. (“NRZ”) and adopted a plan of complete liquidation and dissolution. During April 2015, we received liquidating dividends and other dividends from HLSS totaling $20.4 million and we sold all of our 1.6 million shares of HLSS common stock in the open market for $7.7 million. As a result of these transactions, we recognized a net loss of $1.9 million for the nine months endedSeptember 30, 2015 (no comparative amounts in 2016) in connection with our investment in HLSS.

Income Tax Provision

We recognized an income tax provision of $12.8 million for the nine months ended September 30, 2016 compared to $8.1 million for the nine months ended September 30, 2015 ($7.3 million and $3.3 million for the third quarter of 2016 and 2015, respectively). Our effective tax rate was 20.1% and 8.3% for the nine months ended September 30, 2016 and September 30, 2015, respectively (39.0% and 8.0% for the third quarter of 2016 and 2015, respectively). Our effective tax rate differs from the Luxembourg statutory tax rate of 29.2% primarily due to the effect of certain deductions in Luxembourg and the mix of income and losses with varying tax rates in multiple taxing jurisdictions. The income tax provision for the third quarter of 2016 reflects an increase in the 2016 effective tax rate and adjustments to true-up the tax provision from prior quarters, resulting in an anticipated 2016 annual effective tax rate of approximately 20%. The higher effective income tax rate for the nine months ended September 30, 2016 was primarily the result of lower pretax income margins which changed the expected mix of taxable income across the jurisdictions in which we operate. Our consolidated effective income tax rate for financial reporting purposes may change periodically due to changes in enacted tax rates, fluctuations in the mix of income earned from our domestic and international operations and our ability to utilize net operating loss and tax credit carryforwards.

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SEGMENT RESULTS OF OPERATIONS

The following section provides a discussion of pretax results of operations of our business segments. Transactions between segments are accounted for as third party arrangements for purposes of presenting segment results of operations. Intercompany transactions primarily consist of IT infrastructure management services and professional services billed by Technology Services. We reflect these as service revenue in the Technology Services segment and technology and telecommunications costs within cost of revenue and SG&A in the segment receiving the services. Certain prior year SG&A cost allocations from Corporate to the segments have been reclassified to conform to the current year presentation.

Financial information for our segments is as follows:

	Three months ended September 30, 2016
(in thousands)	Mortgage Services			Financial Services			Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	191,766		$	17,566		$	41,544		$	(11,094	)	$	239,782
Reimbursable expenses	12,047			33			—			—			12,080
Non-controlling interests	883			—			—			—			883
	204,696			17,599			41,544			(11,094		)	252,745
Cost of revenue	132,399			13,238			38,557			(10,192		)	174,002
Gross profit (loss)	72,297			4,361			2,987			(902		)	78,743
Selling, general and administrative expenses	27,543			4,002			6,115			16,226			53,886
Income (loss) from operations	44,754			359			(3,128		)	(17,128		)	24,857
Total other income (expense), net	8			28			1			(6,098		)	(6,061		)
Income (loss) before income taxes and    non-controlling interests	$	44,762		$	387		$	(3,127	)	$	(23,226	)	$	18,796
Margins:
Gross profit/service revenue	38		%	25		%	7		%	N/M			33		%
Income (loss) from operations/service revenue	23		%	2		%	(8		)%	N/M			10		%

N/M — not meaningful.

	Three months ended September 30, 2015
(in thousands)	Mortgage Services			Financial Services			Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	182,222		$	21,314		$	51,437		$	(9,504	)	$	245,469
Reimbursable expenses	26,433			23			—			—			26,456
Non-controlling interests	851			—			—			—			851
	209,506			21,337			51,437			(9,504		)	272,776
Cost of revenue	122,724			15,418			44,419			(8,711		)	173,850
Gross profit (loss)	86,782			5,919			7,018			(793		)	98,926
Selling, general and administrative expenses	23,399			4,553			7,628			15,758			51,338
Income (loss) from operations	63,383			1,366			(610		)	(16,551		)	47,588
Total other income (expense), net	9			31			38			(6,466		)	(6,388		)
Income (loss) before income taxes and     non-controlling interests	$	63,392		$	1,397		$	(572	)	$	(23,017	)	$	41,200
Margins:
Gross profit/service revenue	48		%	28		%	14		%	N/M			40		%
Income (loss) from operations/service revenue	35		%	6		%	(1		)%	N/M			19		%

N/M — not meaningful.

	Nine months ended September 30, 2016
(in thousands)	Mortgage Services			Financial Services			Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	569,038		$	57,376		$	120,291		$	(31,319	)	$	715,386
Reimbursable expenses	41,232			85			—			—			41,317
Non-controlling interests	1,973			—			—			—			1,973
	612,243			57,461			120,291			(31,319		)	758,676
Cost of revenue	381,543			41,645			122,874			(28,826		)	517,236
Gross profit (loss)	230,700			15,816			(2,583		)	(2,493		)	241,440
Selling, general and administrative expenses	83,119			12,515			20,113			45,962			161,709
Income (loss) from operations	147,581			3,301			(22,696		)	(48,455		)	79,731
Total other income (expense), net	57			63			101			(16,094		)	(15,873		)
Income (loss) before income taxes and non-controlling interests	$	147,638		$	3,364		$	(22,595	)	$	(64,549	)	$	63,858
Margins:
Gross profit (loss)/service revenue	41		%	28		%	(2		)%	N/M			34		%
Income (loss) from operations/service revenue	26		%	6		%	(19		)%	N/M			11		%

N/M — not meaningful.

	Nine months ended September 30, 2015
(in thousands)	Mortgage Services			Financial Services			Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	492,277		$	66,977		$	159,399		$	(28,773	)	$	689,880
Reimbursable expenses	89,139			103			—			—			89,242
Non-controlling interests	2,457			—			—			—			2,457
	583,873			67,080			159,399			(28,773		)	781,579
Cost of revenue	350,238			46,058			144,565			(26,026		)	514,835
Gross profit (loss)	233,635			21,022			14,834			(2,747		)	266,744
Selling, general and administrative expenses	69,188			13,856			22,189			50,077			155,310
Change in the fair value of Equator Earn Out	—			—			(7,591		)	—			(7,591		)
Income (loss) from operations	164,447			7,166			236			(52,824		)	119,025
Total other income (expense), net	28			21			21			(21,843		)	(21,773		)
Income (loss) before income taxes and non-controlling interests	$	164,475		$	7,187		$	257		$	(74,667	)	$	97,252
Margins:
Gross profit/service revenue	47		%	31		%	9		%	N/M			39		%
Income from operations/service revenue	33		%	11		%	—		%	N/M			17		%

N/M — not meaningful.

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Mortgage Services

Revenue

Revenue by service line was as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Service revenue:
Asset management services	$	144,001	$	130,074	11		$	420,667	$	334,093	26
Insurance services	23,560		25,801		(9	)	68,288		74,280		(8	)
Residential property valuation	11,438		13,769		(17	)	46,567		47,210		(1	)
Default management services	4,499		7,006		(36	)	14,524		20,774		(30	)
Origination services	8,268		5,572		48		18,992		15,920		19
Total service revenue	191,766		182,222		5		569,038		492,277		16
Reimbursable expenses:
Asset management services	9,662		23,548		(59	)	32,157		81,386		(60	)
Insurance services	1,791		2,140		(16	)	7,026		5,322		32
Default management services	516		692		(25	)	1,873		2,320		(19	)
Origination services	78		53		47		176		111		59
Total reimbursable expenses	12,047		26,433		(54	)	41,232		89,139		(54	)
Non-controlling interests	883		851		4		1,973		2,457		(20	)
Total revenue	$	204,696	$	209,506	(2	)	$	612,243	$	583,873	5

We recognized service revenue of $569.0 million for the nine months ended September 30, 2016, a 16%increase compared to the nine months ended September 30, 2015 ($191.8 million for the third quarter of 2016, a 5%increase compared to the third quarter of 2015).

The increase in service revenue for the nine months ended September 30, 2016 was primarily due to revenue growth in the asset management services businesses from higher volumes of property preservation referrals, growth in the percentage of homes sold through auction on Hubzu, growth in the number of non-Ocwen properties sold on Hubzu and customer growth in origination services. In addition, in early 2015, the pricing model to Ocwen for REO preservation services within asset management services changed. Historically, we billed (1) a fixed fee per REO asset (which was recognized as service revenue) and (2) actual vendor costs (which were recognized as reimbursable expenses revenue). Beginning in early 2015, our pricing for new Ocwen REO referrals is on a per service basis (which is recognized as service revenue). This change results in certain services that were historically reimbursable expenses revenue becoming service revenue. As a result, service revenue in the asset management services businesses increased and reimbursable expenses revenue decreased. The increase was partially offset by decreases in insurance services and default management services due to a reduction in foreclosure file referrals.

The increase in service revenue for the third quarter of 2016 was primarily due to growth in the volume of property preservation referrals, as described above.

Certain of our Mortgage Services businesses are impacted by seasonality. REO sales and lawn maintenance services within the asset management services business are generally lowest during the fall and winter months and highest during the spring and summer months.

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Cost of Revenue and Gross Profit

Cost of revenue consists of the following:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	30,431	$	21,108	44		$	85,865	$	62,112	38
Outside fees and services	76,710		66,381		16		220,369		173,103		27
Reimbursable expenses	12,047		26,433		(54	)	41,232		89,139		(54	)
Technology and telecommunications	12,284		7,856		56		31,275		23,193		35
Depreciation and amortization	927		946		(2	)	2,802		2,691		4
Cost of revenue	$	132,399	$	122,724	8		$	381,543	$	350,238	9

Cost of revenue for the nine months ended September 30, 2016 of $381.5 millionincreased by 9% compared to the nine months ended September 30, 2015 ($132.4 million for the third quarter of 2016, an 8%increase compared to the third quarter of 2015). The increases were primarily attributable to higher outside fees and services, compensation and benefits costs and technology and telecommunications costs, partially offset by a decrease in reimbursable expenses. Outside fees and services increased from a higher volume of property preservation referrals and the change in billing discussed in the revenue section above, partially offset for the nine months ended September 30, 2016 by the termination of the Data Access and Services Agreement effective March 31, 2015. Compensation and benefits costs and technology and telecommunications costs increased from our investments to support certain of our growth initiatives. Reimbursable expenses declined primarily as a result of the change in billing discussed in the revenue section above.

Gross profit decreased to $230.7 million, representing 41% of service revenue, for the nine months ended September 30, 2016 compared to $233.6 million, representing 47% of service revenue, for the nine months ended September 30, 2015 (decreased to $72.3 million representing 38% of service revenue for the third quarter of 2016, compared to $86.8 million representing 48% of service revenue for the third quarter of 2015). Gross profit as a percentage of service revenue decreased from a change in revenue mix, as a higher percentage of revenue in 2016 was from lower margin property preservation services and higher compensation and benefits costs and technology and telecommunications costs, as described above. For the nine months ended September 30, 2016, this decrease was partially offset by the March 31, 2015 termination of the Data Access and Services Agreement with Ocwen.

Our margins can vary substantially depending upon service revenue mix.

Selling, General and Administrative Expenses and Income from Operations

SG&A expenses consist of the following:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	1,789	$	1,148	56		$	7,631	$	3,159	142
Professional services	1,852		1,278		45		8,502		9,388		(9	)
Occupancy related costs	3,486		2,744		27		10,087		8,147		24
Amortization of intangible assets	9,542		7,941		20		30,863		21,158		46
Depreciation and amortization	750		614		22		2,202		1,768		25
Marketing costs	9,003		6,433		40		20,598		16,213		27
Other	1,121		3,241		(65	)	3,236		9,355		(65	)
Selling, general and administrative expenses	$	27,543	$	23,399	18		$	83,119	$	69,188	20

SG&A for the nine months ended September 30, 2016 of $83.1 millionincreased by 20% compared to the nine months ended September 30, 2015 ($27.5 million for the third quarter of 2016, an 18%increase compared to the third quarter of 2015). The increases were primarily driven by higher amortization of intangible assets, marketing costs and compensation and benefits costs, partially offset by lower other costs. The increase in marketing costs relates primarily to Owners.com, as we launched our buy side brokerage marketing campaign in 2016. Compensation and benefits costs and occupancy related costs increased primarily due to growth of the sales and marketing organizations to support our revenue and customer diversification initiatives and higher

38

headcount to support certain of our growth initiatives. The decrease in other costs for the nine months ended September 30, 2016 was primarily due to a favorable loss accrual adjustment for the three months ended March 31, 2016.

Income from operations decreased to $147.6 million, representing 26% of service revenue, for the nine months ended September 30, 2016 compared to $164.4 million, representing 33% of service revenue, for the nine months ended September 30, 2015 (decreased to $44.8 million representing 23% of service revenue for the third quarter of 2016, compared to $63.4 million, representing 35% of service revenue for the third quarter of 2015). The decreases in operating income margin were primarily the result of lower gross profit margins from the change in the revenue mix and higher SG&A expenses, as discussed above.

Financial Services

Revenue

Revenue by service line was as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Service revenue:
Customer relationship management	$	8,777	$	13,138	(33	)	$	29,052	$	38,323	(24	)
Asset recovery management	8,789		8,176		7		28,324		28,654		(1	)
Total service revenue	17,566		21,314		(18	)	57,376		66,977		(14	)
Reimbursable expenses:
Asset recovery management	33		23		43		85		103		(17	)
Total reimbursable expenses	33		23		43		85		103		(17	)
Total revenue	$	17,599	$	21,337	(18	)	$	57,461	$	67,080	(14	)

We recognized service revenue of $57.4 million for the nine months ended September 30, 2016, a 14%decrease compared to the nine months ended September 30, 2015 ($17.6 million for the third quarter of 2016, an 18%decrease compared to the third quarter of 2015). The decreases were primarily due to lower customer relationship management business as we have severed relationships with and reduced the volume of services provided to certain clients that were not profitable to us and we experienced a reduction in volume from the transition of services from one customer to another.

Certain of our Financial Services businesses are impacted by seasonality. Revenue in the asset recovery management business tends to be higher in the first quarter, as borrowers may utilize tax refunds and bonuses to pay debts, and generally declines throughout the remainder of the year.

Cost of Revenue and Gross Profit

Cost of revenue consists of the following:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	10,019	$	11,843	(15	)	$	31,554	$	34,797	(9	)
Outside fees and services	762		620		23		2,283		2,050		11
Reimbursable expenses	33		23		43		85		103		(17	)
Technology and telecommunications	1,990		2,486		(20	)	6,409		7,726		(17	)
Depreciation and amortization	434		446		(3	)	1,314		1,382		(5	)
Cost of revenue	$	13,238	$	15,418	(14	)	$	41,645	$	46,058	(10	)

Cost of revenue for the nine months ended September 30, 2016 of $41.6 milliondecreased by 10% compared to the nine months ended September 30, 2015 ($13.2 million for the third quarter of 2016, a 14%decrease compared to the third quarter of 2015). The decreases in cost of revenue were primarily due to a decrease in compensation and benefits costs and lower technology and

39

telecommunications costs resulting from the implementation of cost savings initiatives in 2015. In addition, compensation and benefits costs were lower as a result of reduced headcount in the customer relationship management business, as discussed above.

Gross profit decreased to $15.8 million, representing 28% of service revenue, for the nine months ended September 30, 2016 compared to $21.0 million, representing 31% of service revenue, for the nine months ended September 30, 2015 (decreased to $4.4 million, representing 25% of service revenue, for the third quarter of 2016 compared to $5.9 million, representing 28% of service revenue, for the third quarter of 2015). Gross profit margins declined as the decrease in customer relationship management revenue exceeded the reduction in expenses. Revenue mix in the asset recovery management business also impacted gross profit margins with higher revenue in the lower margin credit card collections business and lower revenue in the higher margin mortgage charge-off collections business.

Selling, General and Administrative Expenses and Income from Operations

SG&A expenses consist of the following:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	192	$	302	(36	)	$	581	$	654	(11	)
Professional services	251		323		(22	)	565		962		(41	)
Occupancy related costs	1,529		1,795		(15	)	4,870		5,641		(14	)
Amortization of intangible assets	988		825		20		2,762		2,897		(5	)
Depreciation and amortization	572		612		(7	)	1,780		1,826		(3	)
Other	470		696		(32	)	1,957		1,876		4
Selling, general and administrative expenses	$	4,002	$	4,553	(12	)	$	12,515	$	13,856	(10	)

SG&A for the nine months ended September 30, 2016 of $12.5 milliondecreased by 10% compared to the nine months ended September 30, 2015 ($4.0 million for the third quarter of 2016, a 12%decrease compared to the third quarter of 2015). The decreases were primarily the result of lower compensation and benefits costs and occupancy related costs due to lower headcount in the customer relationship management business largely attributable to the reasons discussed above and lower professional services expenses driven by a decrease in legal costs.

Income from operations decreased to $3.3 million, representing 6% of service revenue, for the nine months ended September 30, 2016 compared to $7.2 million, representing 11% of service revenue, for the nine months ended September 30, 2015 (decreasedto $0.4 million, representing 2% of service revenue, for the third quarter of 2016 compared to $1.4 million, representing 6% of service revenue, for the third quarter of 2015). The decreases in operating income as a percentage of service revenue were primarily the result of lower gross profit margins, partially offset by lower SG&A, as discussed above.

Technology Services

Revenue

Revenue by service line was as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Service revenue:
Software services	$	30,917	$	36,403	(15	)	$	88,076	$	107,614	(18	)
IT infrastructure services	10,627		15,034		(29	)	32,215		51,785		(38	)
Total revenue	$	41,544	$	51,437	(19	)	$	120,291	$	159,399	(25	)

We recognized service revenue of $120.3 million for the nine months ended September 30, 2016, a 25%decrease compared to the nine months ended September 30, 2015 ($41.5 million for the third quarter of 2016, a 19%decrease compared to the third quarter of 2015). The decreases were driven by lower IT infrastructure services due to the implementation of cost reduction initiatives and the transitioning of resources supporting Ocwen’s technology infrastructure to Ocwen, which are generally billed on a cost

plus basis, and a decrease in software services revenue due to lower rates charged to Ocwen for certain technologies and a decline in the number of loans on REALServicing.

For segment presentation purposes, revenue from services provided by Technology Services to our other reportable segments is eliminated in consolidation. This intercompany revenue is included as revenue in the Technology Services segment and as technology and telecommunications costs, a component of cost of revenue and SG&A, in our other reportable segments.

Cost of Revenue and Gross Profit (Loss)

Cost of revenue consists of the following:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2016		2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	25,907	$	30,046	(14	)	$	83,774	$	100,304	(16	)
Outside fees and services	6		3		100		21		16		31
Technology and telecommunications	7,387		8,947		(17	)	23,188		27,837		(17	)
Depreciation and amortization	5,257		5,423		(3	)	15,891		16,408		(3	)
Cost of revenue	$	38,557	$	44,419	(13	)	$	122,874	$	144,565	(15	)

Cost of revenue for the nine months ended September 30, 2016 of $122.9 milliondecreased by 15% compared to the nine months ended September 30, 2015 ($38.6 million for the third quarter of 2016, a 13%decrease compared to the third quarter of 2015). The decreases were primarily due to lower compensation and benefits and technology and telecommunications costs driven by the implementation of cost savings initiatives in 2015 and the transition of resources supporting technology infrastructure to Ocwen as part of the infrastructure separation. In addition, compensation and benefits costs for the nine months ended September 30, 2016 and 2015 include $0.6 million and $3.2 million, respectively, of severance expense related to the reduction of staff.

Gross loss was $(2.6) million, representing (2)% of service revenue, for the nine months ended September 30, 2016 compared to gross profit of $14.8 million, representing 9% of service revenue, for the nine months ended September 30, 2015 (gross profit was $3.0 million, representing 7% of service revenue, for the third quarter of 2016 compared to $7.0 million, representing 14% of service revenue, for the third quarter of 2015) as the decline in revenue exceeded the decline in compensation and benefits costs and technology and telecommunications costs.

Selling, General and Administrative Expenses, Other Operating Expenses and Income (Loss) from Operations

SG&A expenses consist of the following:

	Three months ended September 30,							Nine months ended September 30,
(in thousands)	2016			2015		% Increase (decrease)		2016		2015		% Increase (decrease)
Compensation and benefits	$	(38	)	$	750	(105	)	$	1,004	$	2,623	(62	)
Professional services	923			402		130		2,474		840		195
Occupancy related costs	2,697			3,220		(16	)	8,127		10,349		(21	)
Amortization of intangible assets	935			1,352		(31	)	2,807		3,940		(29	)
Depreciation and amortization	872			594		47		2,485		1,434		73
Marketing costs	227			307		(26	)	717		629		14
Other	499			1,003		(50	)	2,499		2,374		5
Selling, general and administrative expenses	$	6,115		$	7,628	(20	)	$	20,113	$	22,189	(9	)

SG&A for the nine months ended September 30, 2016 of $20.1 milliondecreased by 9% compared to the nine months ended September 30, 2015 ($6.1 million for the third quarter of 2016, a 20%decrease compared to the third quarter of 2015). The decreases were primarily driven by lower occupancy costs related to facility consolidation and relocation during 2015, lower amortization of intangible assets driven by the write-off of certain intangible assets in the fourth quarter of 2015 and lower compensation and benefits from the implementation of cost savings initiatives in 2015, partially offset by an increase in professional services due to higher legal and regulatory costs and higher depreciation and amortization related to the facility consolidations and relocations in 2015.

40

We recognized a gain in other operating expenses on the change in fair value of the Equator Earn Out of $7.6 million for the nine months ended September 30, 2015. The liability for contingent consideration was reflected at fair value and adjusted each reporting period with the change in fair value recognized in earnings. In 2015, we reached an agreement with the former owners of Equator to extinguish any liability for the Equator Earn Out. In connection with this settlement, we reduced the liability for the Equator Earn Out to $0 and recognized a $7.6 million increase in earnings.

Loss from operations was $(22.7) million, representing (19)% of service revenue, for the nine months ended September 30, 2016 compared to income from operations of $0.2 million, representing less than 1% of service revenue, for the nine months ended September 30, 2015 (loss from operations was $(3.1) million, representing (8)% of service revenue, for the third quarter of 2016 compared to loss from operations of $(0.6) million, representing (1)% of service revenue, for the third quarter of 2015). Loss from operations as a percentage of service revenue increased primarily due to the decrease in service revenue, partially offset by the decreases in cost of revenue and SG&A, as discussed above.

Corporate Items and Eliminations

Corporate Items and Eliminations include interest expense, costs related to corporate support functions including executive, finance, law, compliance, human resources, vendor management, risk management, sales and marketing cost not allocated to the business units and non-operating items. It also includes eliminations of transactions between the reportable segments.

Selling, General and Administrative Expenses and Other Income (Expense), net

Corporate costs consist of the following:

	Three months ended September 30,							Nine months ended September 30,
(in thousands)	2016		2015			% Increase (decrease)		2016		2015			% Increase (decrease)
Compensation and benefits	$	12,202	$	11,706		4		$	33,244	$	33,869		(2	)
Professional services	1,071		2,005			(47	)	5,992		7,447			(20	)
Occupancy related costs	1,191		2,049			(42	)	3,701		6,372			(42	)
Depreciation and amortization	363		570			(36	)	1,047		2,128			(51	)
Marketing costs	33		424			(92	)	99		1,485			(93	)
Other	1,366		(996		)	237		1,879		(1,224		)	254
Selling, general and administrative expenses	16,226		15,758			3		45,962		50,077			(8	)
Total other income (expense), net	6,098		6,466			(6	)	16,094		21,843			(26	)
Total corporate costs	$	22,324	$	22,224		—		$	62,056	$	71,920		(14	)

SG&A for the nine months ended September 30, 2016 of $46.0 milliondecreased by 8% compared to the nine months ended September 30, 2015 ($16.2 million for the third quarter of 2016, a 3%increase compared to the third quarter of 2015). For the nine months ended September 30, 2016, the decrease was primarily driven by lower legal and regulatory costs and occupancy related costs and increased support department allocations to the segments. SG&A for the third quarter of 2016 was largely consistent with the third quarter of 2015.

Other income (expense), net primarily includes interest expense and other non-operating gains and losses. Other income (expense), net for the nine months ended September 30, 2016 of $16.1 milliondecreased by 26% compared to the nine months ended September 30, 2015 ($6.1 million for the third quarter of 2016, a 6%decrease compared to the third quarter of 2015). Interest expense was $18.5 million for the nine months ended September 30, 2016, a decrease of $2.9 million compared to the nine months ended September 30, 2015 ($6.0 million for the third quarter of 2016, a decrease of $1.1 million compared to the third quarter of 2015), primarily from the 2016 and 2015 repurchases of our senior secured term loan with an aggregate par value of $100.0 million.

During the nine months ended September 30, 2016, we repurchased portions of our senior secured term loan with an aggregate par value of $51.0 million at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt (no repurchases in the third quarter of 2016). During the nine months ended September 30, 2015, we repurchased portions of our senior secured term loan with an aggregate par value of $27.0 million at a weighted average discount of 9.8%, recognizing a net gain of $2.0 million on the early extinguishment of debt (repurchased aggregate par value of $11.0 million at a weighted average discount of 11.0%, recognizing a net gain of $0.9 million on the early extinguishment of debt for the third quarter of 2015).

During the nine months ended September 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million, incurred expenses of $3.4 million and earned dividends of $1.0 million related to this investment (no comparative amounts in 2015).

During March 2015, we purchased 1.6 million shares of HLSS common stock in the open market for $30.0 million. On April 6, 2015, HLSS completed the sale of substantially all of its assets to NRZ and adopted a plan of complete liquidation and dissolution. During April 2015, we received liquidating dividends and other dividends from HLSS totaling $20.4 million and we sold all of our 1.6 million shares of HLSS common stock in the open market for $7.7 million. As a result of these transactions, we recognized a net loss of $1.9 million for the nine months endedSeptember 30, 2015 (no comparative amounts in 2016) in connection with our investment in HLSS.

Intercompany revenue that is eliminated in consolidation increased for the nine months ended September 30, 2016 and the third quarter of 2016 compared to the similar periods in 2015. These intercompany transactions consisted primarily of IT infrastructure services which are billed on a cost plus basis along with professional services billed by Technology Services. The increase was due to the increase in technology costs related to higher volume of activity primarily in Mortgage Services segment. While the expenses are recognized in the Mortgage Services and Financial Services segments above, the elimination of these expenses is reflected in Corporate Items and Eliminations.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary source of liquidity is cash flows from operations. We seek to deploy excess cash generated in a disciplined manner. Principally, we intend to use excess cash to develop complementary services and businesses that we believe will generate attractive margins in line with our core capabilities and strategy. We may also use cash to repurchase and repay our senior secured term loan and repurchase shares of our common stock. We also consider and evaluate business acquisitions that may arise from time to time that are aligned with our strategy.

For the nine months ended September 30, 2016, we used $49.2 million to repay and repurchase portions of the senior secured term loan and make contractual repayments of the senior secured term loan ($1.5 million for the third quarter of 2016) and $34.3 million to repurchase shares of our common stock ($14.6 million for the third quarter of 2016).

Senior Secured Term Loan

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain wholly-owned subsidiaries are guarantors of the term loan. We subsequently amended the senior secured term loan agreement to increase the principal amount of the senior secured term loan and, among other changes, re-establish the $200.0 million incremental term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year and increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement). The lenders of the senior secured term loan, as amended, have no obligation to provide any such additional debt under the accordion provision. As of September 30, 2016, $481.1 million was outstanding under the senior secured term loan agreement, as amended, compared to $536.6 million as of December 31, 2015.

After giving effect to the third amendment entered into on August 1, 2014, the term loan must be repaid in equal consecutive quarterly principal installments of $1.5 million, which commenced on September 30, 2014, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement will become due on the earlier of (i) December 9, 2020 and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders or as otherwise provided in the senior secured term loan agreement upon the occurrence of any event of default under the senior secured term loan agreement. However, if the leverage ratio exceeds 3.00 to 1.00, as calculated in accordance with the provisions of the senior secured term loan agreement, a percentage of cash flows must be used to repay principal (the percentage increases if the leverage ratio exceeds 3.50 to 1.00). No mandatory prepayments were required for the nine months ended September 30, 2016. The interest rate as of September 30, 2016 was 4.50%.

During the nine months ended September 30, 2016, we repurchased portions of our senior secured term loan with an aggregate par value of $51.0 million at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt (no repurchases in the third quarter of 2016). During the nine months ended September 30, 2015, we repurchased portions of our senior secured term loan with an aggregate par value of $27.0 million at a weighted average discount of 9.8%, recognizing a net gain of $2.0 million on the early extinguishment of debt (repurchased aggregate par value of $11.0

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million at a weighted average discount of 11.0%, recognizing a net gain of $0.9 million on the early extinguishment of debt for the third quarter of 2015).

The debt covenants in the senior secured term loan agreement limit, among other things, our ability to incur additional debt, pay dividends and repurchase shares of our common stock. In the event we require additional liquidity, our ability to obtain it may be limited by the senior secured term loan.

Cash Flows

The following table presents our cash flows for the nine months ended September 30:

(in thousands)	2016			2015			% Increase (decrease)
Net income adjusted for non-cash items	$	115,024		$	145,612		(21	)
Changes in operating assets and liabilities	(8,989		)	(36,461		)	75
Net cash flows provided by operating activities	106,035			109,151			(3	)
Net cash flows used in investing activities	(74,095		)	(39,995		)	(85	)
Net cash flows used in financing activities	(76,319		)	(80,370		)	5
Net decrease in cash and cash equivalents	(44,379		)	(11,214		)	(296	)
Cash and cash equivalents at the beginning of the period	179,327			161,361			11
Cash and cash equivalents at the end of the period	$	134,948		$	150,147		(10	)

Cash Flows from Operating Activities

Cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net income. For the nine months ended September 30, 2016, we generated cash flows from operating activities of $106.0 million, or approximately $0.15 for every dollar of service revenue ($0.15 for every dollar of service revenue for the third quarter of 2016) compared to cash flows from operating activities of $109.2 million, or approximately $0.16 for every dollar of service revenue for the nine months ended September 30, 2015 ($0.22 for every dollar of service revenue for the third quarter of 2015). The decrease in cash flows from operations for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 was principally driven by lower net income, partially offset by an improvement in working capital changes. Changes in working capital were principally driven by higher collections of accounts receivable and the timing of payment of accounts payable and other accrued expenses, partially offset by higher prepaid expenses and other current assets from our investment in real estate that we are renovating and intend to sell and payments totaling $2.9 million related to deferred purchase consideration for the July 17, 2015 acquisition of CastleLine.

Operating cash flows per service revenue dollar can be negatively impacted because of the nature of some of our services. Certain services are performed immediately following or shortly after the referral, but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.) and our cash flows from operations may be negatively impacted when comparing one interim period to another.

Cash Flows from Investing Activities

Cash flows from investing activities primarily include capital expenditures, acquisitions of businesses and purchases and sales of available for sale securities. For the nine months ended September 30, 2016 and 2015, we used $16.5 million and $27.7 million, respectively, for capital expenditures primarily related to investments in the development of certain software applications, IT infrastructure and facility build-outs. The decrease in capital expenditures primarily related to the completion of projects in 2015, including several office facility relocations. In addition, during the nine months ended September 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million, including brokers’ commissions. On July 29, 2016, we acquired Granite for $9.6 million.

During March 2015, we purchased 1.6 million shares of HLSS common stock for $30.0 million, including brokers’ commissions. During the nine months ended September 30, 2015, we received $28.1 million from liquidating dividends and the sale of the HLSS common stock. On July 17, 2015, we acquired CastleLine for $11.2 million of cash at acquisition, excluding cash balances acquired of $1.1 million. Additionally, the acquisition includes $10.5 million of cash payable over four years from the acquisition date and $14.4 million of restricted common stock of the Company.

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Cash Flows from Financing Activities

Cash flows from financing activities for the nine months ended September 30, 2016 and 2015 include activities associated with share repurchases, debt repurchases and repayments, stock option exercises and payments to non-controlling interests. During the nine months ended September 30, 2016 and 2015, we used $34.3 million and $49.0 million, respectively, to repurchase our common stock. During the nine months ended September 30, 2016 and 2015, we used $49.2 million and $29.1 million, respectively, to repurchase portions of our senior secured term loan and make scheduled repayments of our senior secured term loan. During the nine months ended September 30, 2016 and 2015, we received $8.9 million and $0.3 million, respectively, from stock option exercises. During the nine months ended September 30, 2016 and 2015, we distributed $1.6 million and $2.1 million, respectively, to non-controlling interests.

Liquidity Requirements after September 30, 2016

On September 12, 2014, we acquired certain assets and assumed certain liabilities of Mortgage Builder Software, Inc. (“Mortgage Builder”). The Mortgage Builder purchase agreement provides for the payment of up to $7.0 million in potential additional consideration based on Adjusted Revenue (as defined in the purchase agreement). As of September 30, 2016, we have recorded $1.5 million of potential additional consideration related to the Mortgage Builder acquisition. The amount ultimately paid will depend on Mortgage Builder’s Adjusted Revenue in the three consecutive 12-month periods following acquisition.

On November 21, 2014, we acquired certain assets and assumed certain liabilities of Owners Advantage, LLC (“Owners”). The Owners purchase agreement provides for a payment of up to $7.0 million of potential additional consideration based on Adjusted Revenue (as defined in the purchase agreement) earned in the two consecutive 12-month periods following closing. We estimated the fair value of the Owners contingent consideration to be $1.3 million as of September 30, 2016. The amount ultimately paid will depend on Owners’ Adjusted Revenue earned in the two consecutive 12-month periods following acquisition.

On July 17, 2015, we acquired CastleLine. A portion of the purchase consideration totaling $10.5 million is payable to the sellers over four years from the acquisition date, including $3.8 million to be paid to certain of the sellers that is contingent on future employment. As of September 30, 2016, we have paid $2.9 million of the $10.5 million that is payable over four years from the acquisition date and $0 of the $3.8 million purchase consideration that is contingent on future employment.

During the fourth quarter of 2016, we expect to distribute $0.4 million to the Lenders One members representing non-controlling interests and repay $1.5 million of the senior secured term loan.

We believe that we will generate sufficient cash flows from operations to fund capital expenditures and required debt and interest payments for the next 12 months.

Contractual Obligations, Commitmentsand Contingencies

For the nine months ended September 30, 2016, there were no significant changes to our contractual obligations from those identified in our Form 10-K for the fiscal year ended December 31, 2015, other than those that occur in the normal course of business. See Note 22 to the condensed consolidated financial statements.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENT

We prepare our interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. In applying many of these accounting principles, we need to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and judgments, however, are often subjective. Actual results may be negatively affected based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.

Our critical accounting policies are described in the MD&A section of our Form 10-K for the year ended December 31, 2015 filed with the SEC on March 15, 2016. Those policies have not changed during the nine months ended September 30, 2016.

Future Adoption of New Accounting Pronouncements

See Note 1 to the condensed consolidated financial statements for a discussion of the future adoption of new accounting pronouncements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Our financial market risk consists primarily of interest rate and foreign currency exchange rate risk.

Interest Rate Risk

As of September 30, 2016, the interest rate charged on the senior secured term loan was 4.50%. The interest rate is calculated based on the Adjusted Eurodollar Rate (as defined in the senior secured term loan agreement) with a minimum floor of 1.00% plus 3.50%.

Based on the principal amount outstanding at September 30, 2016, a one percentage point increase in the Eurodollar Rate would increase our annual interest expense by approximately $2.5 million, based on the September 30, 2016 Adjusted Eurodollar Rate. There would be no change in our annual interest expense if there was a one percentage point decrease in the Eurodollar Rate.

Currency Exchange Risk

We are exposed to currency risk from potential changes in currency values of our non-United States dollar denominated expenses, assets, liabilities and cash flows. Our most significant currency exposure relates to the Indian rupee. Based on expenses incurred in Indian rupees during the nine months ended September 30, 2016, a one percentage point increase or decrease in value of the Indian rupee in relation to the United States dollar would increase or decrease our annual expenses by approximately $1.1 million.

Item 4. Controls and Procedures

Management, under the supervision of and with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on such evaluation and solely because we have not completed remediation of the previously disclosed material weakness in internal control over financial reporting (see our Annual Report on Form 10-K for the year ended December 31, 2015) related to ineffective controls related to the review of impairment indicators of long-lived assets, including premises and equipment, and the impairment analysis of indefinite-lived assets, primarily goodwill, management concluded that our internal control over financial reporting was not effective as of September 30, 2016. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We are in the process of implementing remediation measures to address the above-described material weakness and enhance the Company’s internal control over financial reporting related to the review of impairment indicators of long-lived assets and the impairment analysis of indefinite-lived assets by taking the following actions:

• Review the processes related to the impairment assessment of long-lived and indefinite-lived assets

• Enhance review controls relating to the review of impairment indicators of long-lived assets and the impairment analysis of indefinite-lived assets

• Test and evaluate the design and operating effectiveness of the control procedures

• Assess the effectiveness of the remediation plan

In the third quarter of 2016, we began the process of implementing a remediation plan and intend to complete remediation of the material weakness by December 31, 2016. We believe the remediation measures will strengthen the Company’s internal control over financial reporting related to the review of impairment indicators of long-lived assets and the impairment analysis of indefinite-lived assets and will remediate the material weakness identified. We will continue to monitor the effectiveness of these remediation measures and will make any changes and take such other actions that we deem appropriate given the circumstances. The material weakness will not be considered remediated until these plans have been fully implemented, tested and are operating effectively for a sufficient period of time.

Other than the steps taken in implementing our remediation plan, there were no changes in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarter ended September 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in legal and administrative proceedings arising in the course of our business. We record a liability for these matters if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range.

On September 8, 2014, the West Palm Beach Firefighters’ Pension Fund filed a putative securities class action suit against Altisource Portfolio Solutions S.A. and certain of its current or former officers and directors in the United States District Court for the Southern District of Florida alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 with regard to disclosures concerning pricing and transactions with related parties that allegedly inflated Altisource Portfolio Solutions S.A. share prices. The Court subsequently appointed the Pension Fund for the International Union of Painters and Allied Trades District Council 35 and the Annuity Fund for the International Union of Painters and Allied Trades District Council 35 as Lead Plaintiffs. On January 30, 2015, Lead Plaintiffs filed an amended class action complaint which added Ocwen Financial Corporation as a defendant, and seeks a determination that the action may be maintained as a class action on behalf of purchasers of Altisource Portfolio Solutions S.A. securities between April 25, 2013 and December 21, 2014 and an unspecified amount of damages. Altisource Portfolio Solutions S.A. moved to dismiss the suit on March 23, 2015. On September 4, 2015, the Court granted the defendants’ motion to dismiss, finding that the Lead Plaintiffs’ amended complaint failed to state a claim as to any of the defendants, but permitting the Lead Plaintiffs to file another amended complaint. Lead Plaintiffs subsequently filed second and third amended complaints with substantially similar claims and theories. Altisource Portfolio Solutions S.A. moved to dismiss the third amended complaint on October 22, 2015. On December 22, 2015, the Court issued an order dismissing with prejudice all claims against Ocwen Financial Corporation and certain claims against Altisource Portfolio Solutions S.A. and the officer and director defendants, but denying the motion to dismiss as to other claims. Altisource Portfolio Solutions S.A. intends to continue to vigorously defend this suit.

On February 11, 2015, W.A. Sokolowski, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the United States District Court for the Southern District of Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duty by Ocwen Financial Corporation’s officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. Altisource Portfolio Solutions S.A. filed a motion to dismiss the complaint on November 9, 2015. While that motion was pending, additional lawsuits alleging similar claims for alleged breaches of fiduciary duties by current or former Ocwen Financial Corporation officers and directors were filed in or transferred to the Court. The Court subsequently consolidated these actions and denied Altisource Portfolio Solutions S.A.’s motion to dismiss the Sokolowski complaint without prejudice to re-file following appointment of lead counsel for the consolidated action and the filing or designation of an operative complaint. Lead counsel for plaintiffs filed their Consolidated Verified Shareholder Derivative Complaint (the “Consolidated Complaint”) on March 8, 2016. The Consolidated Complaint alleges claims that Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants aided and abetted alleged breaches of fiduciary duties by Ocwen Financial Corporation officers and directors and/or were unjustly enriched in connection with business dealings with Ocwen Financial Corporation. The Consolidated Complaint also seeks contribution from Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants for amounts Ocwen Financial Corporation paid in connection with a settlement with the New York State Department of Financial Services. Altisource Portfolio Solutions S.A. and Beltline Road Insurance Agency, Inc. filed motions to dismiss the Consolidated Complaint on May 13, 2016 and intend to vigorously defend the lawsuit. The Court disclosed that the parties reached a settlement in a settlement conference on October 13, 2016. The Court docket provides that a Stipulation of Settlement is due on or before November 18, 2016, and a Final Approval Hearing will be held before the Court on January 18, 2017.

On March 26, 2015, Robert Moncavage, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duties by the current or former Ocwen Financial Corporation officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. On November 9, 2015, the Court entered an order staying all proceedings in the case pending further order of the Court. If the litigation proceeds, Altisource Portfolio Solutions S.A. intends to vigorously defend the lawsuit and to move to dismiss all claims against it.

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Altisource is unable to predict the outcomes of these lawsuits or reasonably estimate the potential loss, if any, arising from the suits, given that the motion to dismiss in the second case has not been adjudicated, a stay has been entered in the third case and significant legal and factual issues remain to be determined in all three cases.

In addition to the matters referenced above, we are involved in legal actions in the course of our business, some of which seek monetary damages. We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows.

Regulatory Matters

Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority. We are currently responding to such inquiries from governmental authorities relating to certain aspects of our business. We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with these inquiries.

Item 1A. Risk Factors

As of the date of this filing, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our Form 10-K for the year ended December 31, 2015 filed with the SEC on March 15, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information related to our repurchases of our equity securities during the three months ended September 30, 2016:

Period	Total number of shares purchased(1)	Weighted average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(2)	Maximum number of shares that may yet be purchased under the plans or programs(2)
Common stock:
July 1 – 31, 2016	43,880	$	25.15	43,880	4,476,277
August 1 – 31, 2016	396,950	28.38		396,950	4,079,327
September 1 – 30, 2016	66,860	32.77		66,860	4,012,467
	507,690	$	28.68	507,690	4,012,467

⁽¹⁾  May include shares withheld from employees to satisfy tax withholding obligations that arose from the exercise of stock options.

⁽²⁾  On May 18, 2016, our shareholders authorized a new share repurchase program that replaces the prior program and authorizes us to purchase up to 4.6 million shares of our common stock in the open market.

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Item 6. Exhibits

*	10.1	Non-Qualified Stock Option Award Agreement between the Company and Gregory J. Ritts, dated as of August 29, 2016
*	10.2	Non-Qualified Stock Option Award Agreement between the Company and Vivek Bhandari, dated as of August 29, 2016
	10.3	Form of Director Restricted Share Award Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 24, 2016)
	10.4	Amendment and Waiver Agreement dated September 30, 2016 between Altisource Solutions S.à r.l. and Altisource Residential Corporation (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on October 3, 2016)
*	31.1	Section 302 Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)
*	31.2	Section 302 Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)
*	32.1	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	101	Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016 is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2016 and 2015; (iii) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2016 and 2015; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (v) Notes to Condensed Consolidated Financial Statements.
*	Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ALTISOURCE PORTFOLIO SOLUTIONS S.A.
		(Registrant)
Date:	October 27, 2016	By:	/s/ Michelle D. Esterman
			Michelle D. Esterman
			Chief Financial Officer
			(On behalf of the Registrant and as its Principal Financial Officer)

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EX-10.1

Exhibit 10.1

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”) is made as of August 29, 2016 (the “Grant Date”), between Altisource Portfolio Solutions S.A., a Luxembourg société anonyme (“Altisource” and, together with its subsidiaries and affiliates, the “Company”), and Gregory J. Ritts,an employee of the Company (the “Employee”).

WHEREAS, the Company desires, by affording the Employee an opportunity to purchase shares of its common stock, par value $1.00 per share (“Shares”), to further the objectives of the Company’s 2009 Equity Incentive Plan (the “2009 Plan”).

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto have agreed, and do hereby agree, as follows:

1. OPTION GRANT

The Company hereby grants to the Employee, pursuant to and subject to the 2009 Plan, the right and option to purchase all or any part of an aggregate 10,000 Shares from the Company for a purchase price of $32.64 per share (the “Strike Price”), on the terms and conditions set forth in this Agreement (the “Options”).

2. OPTION TERM

The term of the Options shall begin on the Grant Date and will continue for a period of ten (10) years from the Grant Date or, for the Ordinary Performance-Based Options and Extraordinary Performance-Based Options, a period of three (3) years after the commencement of vesting, whichever is longer, except as provided in Section 5 below. To the extent the Ordinary Performance-Based Options or Extraordinary Performance-Based Options do not commence vesting on or before ten (10) years from the Grant Date, they will terminate.

3. VESTING OF OPTIONS

A. Vesting Schedule

(1) Time-Based Vesting. Subject to the provisions of Sections 5 and 6 below, fifty percent (50%) of the Options (the “Time-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Time-Based Options shall vest on each anniversary of the date of this Agreement commencing on the first anniversary of this Agreement and continuing until all Time-Based Options are vested.

(2) Performance-Based Vesting. Fifty percent (50%) of the Options shall be performance awards pursuant to Section 6.04 of the 2009 Plan (the “Performance-Based Options”) and shall vest based on the achievement of the following performance criteria as follows, subject in each case to the provisions of Sections 5 and 6 below.

(a) Ordinary Performance-Based Vesting. Two-thirds (2/3) of the Performance-Based Options (the “Ordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Ordinary Performance-Based Options shall vest on the date as of which both of the following performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds two times the Strike Price, and (y) investors achieve a 20%Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Ordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.

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(b) Extraordinary Performance-Based Vesting. One-third (1/3) of the Performance-Based Options (the “Extraordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One- third (1/3) of the Extraordinary Performance-Based Options shall vest on the date as of which both of the following extraordinary performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds three times the Strike Price, and (y) investors achieve a 25% Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Extraordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.

For the avoidance of doubt, the requisite ordinary performance and/or extraordinary performance criteria provided in clauses (x) and (y) of Section 3, Subsections A(2)(a) and A(2)(b) above, once satisfied for the initial vesting of the Ordinary Performance-Based Options and/or the Extraordinary Performance-Based Options, respectively, do not need to continue to be satisfied for vesting of the same on the subsequent two (2) anniversaries of such initial vesting.    

B. Accelerated Vesting

Notwithstanding the vesting schedule provided in Section 3, Subsection A above:

(1) If the Employee’s employment is terminated by reason of (a) death or Disability or (b) Retirement, then the Time-Based Options shall vest and shall become immediately exercisable in full on the date of such termination; provided, however, that the Employee’s right to such accelerated vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, or three (3) years on the date of Retirement, unless otherwise determined by the Company in its sole discretion.

(2) If the Employee’s employment is terminated by reason of death or Disability, then the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall remain outstanding, subject to vesting only upon satisfaction of the respective criteria for the vesting of such options set forth in Section 3, Subsection A above; provided, however, that the Employee’s right to such continued vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, unless otherwise determined by the Company in its sole discretion.

C. General

The Employee shall have none of the rights of a stockholder with respect to any of the Shares subject to the Options until such Shares shall be issued in the Employee’s name or the name of the Employee’s designee following the exercise of the Options.

4. METHOD OF OPTION EXERCISE

A. Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice to the Company at its executive offices to the attention of the Corporate Secretary of the Company (the “Secretary”). Such notice shall state the election to exercise the Options, shall state the number of shares in respect of which it is being exercised (the “Purchased Shares”) and shall be signed by the person or persons so exercising the Options. In no case may the Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, the Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise the Options.

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B. Such notice shall be accompanied by (i) a personal check payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (ii) delivery to the Company of the number of Shares duly endorsed for transfer and owned by the Employee that have an aggregate Fair Market Value equal to the aggregate purchase price of the Purchased Shares or (iii) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Compensation Committee of the Board of Directors (the “Committee”). “Fair Market Value” shall have the meaning given to that term in the 2009 Plan. In addition to and at the time of payment of the purchase price, the person exercising the Options shall pay to the Company the full amount of any federal and state withholding or other taxes applicable to the taxable income of such person resulting from such exercise in cash unless the Committee in its sole discretion shall permit such taxes to be paid in Shares. Such payment may also be made in the form of payroll withholding, at the election of the option holder. The Company shall issue the Shares of the said Purchased Shares as soon as practicable after receipt of the notice and all required payments by the person or persons exercising the Options as provided in Section 4, Subsection A above. Unless the person or persons exercising the Options shall otherwise direct the Company in writing, such Shares shall be registered in the name of the person or persons so exercising the Options and shall be delivered as aforesaid to or upon the written order of the person or persons exercising the Options.

C. In the event the Options shall be exercised, pursuant to Sections 3 and 5 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Options.

D. The date of exercise of the Options shall be the date on which the notice, the documents and all payments required under this Section 4 are received by or arranged with the Secretary. If such notice is received after the market closes, the following trading day will be considered the date of exercise. All Shares that shall be purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.

E. The Company may require the Employee to exercise the Options electronically through the Shareworks system or any other online system pursuant to the procedures set forth therein as determined by the Company in its sole discretion.

F. The Company may amend the procedures set forth in Section 4, Subsections A through E in its sole discretion.

5. TERMINATION OF OPTIONS

The Options may not be exercised to any extent after termination of the Options in one of the ways, whichever first occurs, set forth below in this Section 5.

A. The Options shall terminate upon the exercise of such Options in the manner provided in this Agreement and the 2009 Plan, whether or not the Shares are ultimately delivered.

B. Except as may otherwise be provided in Section 5, Subsection C below for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date; provided, however, that in the event that the applicable ordinary performance and/or extraordinary performance conditions are achieved prior to the tenth anniversary of the Grant Date, the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall terminate on the earlier to occur of: (1) the third anniversary of the date the relevant performance criteria are achieved, or (2) the tenth anniversary of the Grant Date. For the avoidance of doubt, the achievement of performance conditions for the Performance-Based Options only will not extend the life of the Extraordinary Performance-Based Options beyond the tenth anniversary of the date of this Agreement. For the further avoidance of doubt, in the event of an employment termination described

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in Section 5, Subsection C below, all Options shall terminate on the dates detailed in Section 5, Subsection C, regardless of whether ordinary performance conditions or extraordinary performance conditions have been achieved.

C. If, prior to exercise, expiration, surrender or cancellation of the Options, the Employee’s employment terminates, the Options shall terminate in accordance with the 2009 Plan except as follows:

(1) by reason of Disability, then the Options shall terminate not later than (a) five (5) years after the date of such termination of employment or (b) the end of the Option’s term, whichever occurs first. In the event of the death of the Employee after such termination of employment, the Options shall terminate on the earlier to occur of: (i) three (3) years after the date of the Employee’s death; or (ii) the end of the Option’s term, during which period the Options may be exercised by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.

(2) by reason of death, then the Options shall terminate no later than (a) three (3) years after the date of the Employee’s death or (b) the end of the Option’s term, whichever occurs first, during which period the Options may be exercised at any time by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.

(3) by reason of termination of employment by the Company for Cause, then all Options shall terminate on such date of termination of employment.

(4) by reason of termination of employment by the Employee (subject to Section 5, Subsection C(5) below with respect to Retirement), then all unvested Options shall terminate on such date of termination of employment and all vested Options shall terminate on the date that is six (6) months after the date of such termination of employment.

(5) by reason of termination of employment by the Company without Cause or Retirement of the Employee, then if the respective performance criteria for Ordinary Performance-Based Options or Extraordinary Performance-Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the later of (x) the six (6) month anniversary of the date such Option vests, or (y) the six (6) month anniversary of the date of such termination of employment, and (ii) if the respective performance criteria for such Ordinary Performance-Based Options or Extraordinary Performance-Based Options have not been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the ninety (90) day anniversary of the date of termination of employment. Notwithstanding the foregoing, if the respective performance criteria for the Ordinary Performance-Based Options or the Extraordinary Performance Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, the Company will have the right in its sole discretion to require the Employee to exercise all or part of such Ordinary Performance-Based Options or such Extraordinary Performance-Based Options at any time. For the avoidance of doubt, in no event shall this Section 5, Subsection C(4) extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.

D. The Employee’s right to retain any Options following termination of employment under this Section 5 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of such termination of employment, or three (3) years in the case of Retirement, unless otherwise determined by the Company in its sole discretion.

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6. CONDITIONS UPON TERMINATION OF EMPLOYMENT

A. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not (A) engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company, (B) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire or engagement as an independent contractor elsewhere, (C) in any way interfere with the relationship between any customer, supplier, licensee or business relation of the Company or (D) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted by Company.

B. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times for consultations at the request of the Company’s management with respect to phases of the business with which the Employee was actively connected during the Employee’s employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.

C. The Employee acknowledges that the Company would not have awarded the Options granted to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.

D. In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies available to the Company at law or in equity (a) the Options, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the market value (on the date of exercise) of any Shares acquired on exercise of the Options less the exercise price paid for such Shares (the “Share Value”) to the extent such Shares were acquired by the Employee upon exercise of the Options at any time from 180 days prior to the earlier of (i) the date of termination of employment or (ii) the date the Employee fails to comply with any promise made in this Section 6, to 180 days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount (either in cash or in Shares) to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company.

E. The Employee further acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 6, Subsection (D) above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants.

F. Any determination by the Board of Directors with regard to Section 6, Subsections (D) and (E) shall be conclusive.

7. ADJUSTMENT UPON CHANGES IN STOCK; CHANGE OF CONTROL/RESTRUCTURING EVENT

A. Except to the extent governed by Section 7, Subsection (B) below, if there shall be any change in the Shares subject to the Options granted hereunder, through merger, consolidation, reorganization,

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recapitalization, stock dividend, stock split, spin off of one or more subsidiaries or other change in the corporate structure, appropriate adjustments shall be made by the Board of Directors in its discretion (or if the Company is not the surviving company in any such transaction, the Board of Directors of the surviving company – with the Board of Directors of the Company and the surviving company collectively referred to in this Section 7 as the “Board”) in the aggregate number and kind of shares subject to the 2009 Plan and the number and kind of shares and the price per share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such a corporate transaction or restructuring. Without limiting the generality of the foregoing, in the event of a restructuring or transaction resulting in some or all of the Company’s Shares being convertible into equity of a separate company, the Board shall have the authority to replace outstanding Options with any one or more of the following: (A) adjusted options of the Company; (B) adjusted options on the equity of the separate company; and (C) a combination of adjusted options on the shares of both the Company and the separate company, all as the Board sees as equitable. In the event of any such option adjustment and/or conversion, the Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement. For the avoidance of doubt, in the event Employee remains employed with the separate company that results from a restructuring or transaction covered by this Section 7, for purposes of this Agreement, the Employee will be deemed to remain employed as if the Employee continued employment with the Company such that the employment termination provisions applicable to Options shall not be invoked unless and until the Employee’s employment with such separate company shall terminate.

B. If a Change of Control/Restructuring Event occurs, the acquiring person or entity shall have the right to cancel the Options in exchange for a payment equal to the then intrinsic value of the Options as determined by the Board, effective as of the Change of Control/Restructuring Date, or to allow the Options to continue in full force and effect in accordance with the terms hereof. If the Options are to remain in place following such Change of Control/Restructuring Event, the Board shall have the right in its discretion to make appropriate adjustments in the aggregate number and kind of Shares and the price per Share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such Change of Control/Restructuring Event. Such discretions shall include the authority to replace outstanding Options with any one or more of the following: (a) adjusted options of the Company; (b) adjusted options on the equity of any separate company surviving such Change of Control/Restructuring event; and (c) a combination of adjusted options on the shares of both the Company and the separate company, as such Board sees as equitable. In the event of any such option adjustment and/or conversion, such Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement.

C. The 2009 Plan and Agreement and the awards granted hereunder shall not affect the right of the Company to reclassify, recapitalize, issue equity or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, wind up or otherwise reorganize. The Board of Directors shall have the discretion to make adjustments to the awards made hereunder to reflect any changes that the Board of Directors deems appropriate as a result of any sale, an IPO, business combination, acquisition, recapitalization, reclassification, merger, consolidation, reorganization, stock dividend, stock split, spin off of one or more divisions or subsidiaries, a “going private” transaction (which shall mean any transaction that results in the occurrence of any of the following events: (i) Altisource’s common stock is no longer listed on any national securities exchange or quoted on the Nasdaq National Market or other securities quotation system; (ii) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (iii) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the awards. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the awards made hereunder to avoid inequitable dilution or enlargement of award

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values or rights in connection with any such event (as determined by the Board of Directors in its sole discretion based on any facts and circumstances it considers relevant). For the avoidance of doubt, the awards are subject to the dilutive impact of equity issuances (including an IPO) or other costs of capital made in connection with acquisitions or capital raises.

8. NON-TRANSFERABILITY OF OPTIONS

The Options shall not be transferable otherwise than by will or by the applicable laws of descent and distribution. More particularly (but without limiting the generality of the foregoing), the Options may not be assigned, transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Options contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Options, shall be null and void and without effect.

9. PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS

The Company shall at all times during the term of the Options reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and/or transfer taxes with respect to the issue and/or transfer of Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

10. DEFINITIONS

A. As used herein, the term “Annualized Rate of Return” shall be determined as a function of the Corporation’s stock price appreciation and dividends and other distributions over the Strike Price. For this purpose, dividends and other distributions shall be deemed reinvested in stock of the Company on the date such dividends and distributions are paid to shareholders. The Committee shall make all determinations of Annualized Rate of Return under this Agreement at its sole discretion.

B. As used herein, the term “Cause” shall mean, as reasonably determined by the Board of Directors (excluding the Employee, if the Employee is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement, whether or not committed in the course of the Employee’s employment with the Company.

C. As used herein, “Change of Control/Restructuring Date” shall mean either the date (i) which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or (ii) a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”

D. As used herein, a “Change of Control/Restructuring Event” shall mean (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a

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reduction of the interest in the Company’s stock of the pre-transaction stockholders to less than fifty percent (50%) of the post-transaction ownership. To the extent the Employee’s employment agreement conflicts with the Change of Control/Restructuring Event definition set forth in the immediately preceding sentence, the Employee’s employment agreement will govern.

E. As used herein, the term “Confidential Information” shall mean all information relating to Company, including any of its subsidiaries, customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.

F. As used herein, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.

G. As used herein, the term “Retirement” shall mean termination (other than by reason of death or Disability) of the Employee’s employment with the Company or one of its subsidiaries pursuant to and in accordance with a plan or program of the Company or subsidiary applicable to the Employee provided, however, that for purposes of this Agreement only, the Employee must have attained the age of sixty (60) and been an employee of the Company for not less than three (3) years as of the date of termination of employment by reason of Retirement.

11. AMENDMENT

In the event that the Board of Directors shall amend the 2009 Plan under the provisions of Section 9 of the 2009 Plan and such amendment shall modify or otherwise affect the subject matter of this Agreement, this Agreement shall, to that extent, be deemed to be amended by such amendment to the 2009 Plan. The Company shall notify the Employee in writing of any such amendment to the 2009 Plan and this Agreement as soon as practicable after its approval. Notwithstanding any other provision of this Agreement or the 2009 Plan, the Employee’s Options under this Agreement may not be amended in a way that materially diminishes the value of the Options without the Employee’s consent to the amendment.

12. CONSTRUCTION

In the event of any conflict between the 2009 Plan and this Agreement, the provisions of the 2009 Plan shall control. This Agreement shall be governed in all respects by the laws of the State of Georgia. No provision of this Agreement

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shall limit in any way whatsoever any right that the Company may otherwise have to terminate the employment of the Employee at any time.

If any provision of this Agreement is held to be unenforceable, then this provision will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

13. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Company and the Employee and supersedes all other discussions, correspondence, representations, understandings and agreements between the parties, with respect to the subject matter hereof.

14. HEADINGS

The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed a part hereof.

15. CONFIRMING INFORMATION

By accepting this Agreement, either through electronic means or by providing a signed copy, the Employee (i) acknowledges and confirms that the Employee has read and understood the 2009 Plan and the Agreement and (ii) acknowledges that acceptance through electronic means is equivalent to doing so by providing a signed copy.

[SIGNATURE PAGE FOLLOWS]

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I hereby agree to and accept the terms of this Agreement.

Employee

_______________________________

Gregory J. Ritts

Altisource Portfolio Solutions S.A.

By: ___________________________

Name: William B. Shepro

Title: Chief Executive Officer

Attested by: ____________________

Name: Kevin J. Wilcox

Title: Chief Administration and Risk Officer

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EX-10.2

Exhibit 10.2

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”) is made as of August 29, 2016 (the “Grant Date”), between Altisource Portfolio Solutions S.A., a Luxembourg société anonyme (“Altisource” and, together with its subsidiaries and affiliates, the “Company”), and Vivek Bhandari,an employee of the Company (the “Employee”).

WHEREAS, the Company desires, by affording the Employee an opportunity to purchase shares of its common stock, par value $1.00 per share (“Shares”), to further the objectives of the Company’s 2009 Equity Incentive Plan (the “2009 Plan”).

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto have agreed, and do hereby agree, as follows:

1. OPTION GRANT

The Company hereby grants to the Employee, pursuant to and subject to the 2009 Plan, the right and option to purchase all or any part of an aggregate 7,500 Shares from the Company for a purchase price of $32.64 per share (the “Strike Price”), on the terms and conditions set forth in this Agreement (the “Options”).

2. OPTION TERM

The term of the Options shall begin on the Grant Date and will continue for a period of ten (10) years from the Grant Date or, for the Ordinary Performance-Based Options and Extraordinary Performance-Based Options, a period of three (3) years after the commencement of vesting, whichever is longer, except as provided in Section 5 below. To the extent the Ordinary Performance-Based Options or Extraordinary Performance-Based Options do not commence vesting on or before ten (10) years from the Grant Date, they will terminate.

3. VESTING OF OPTIONS

A. Vesting Schedule

(1) Time-Based Vesting. Subject to the provisions of Sections 5 and 6 below, fifty percent (50%) of the Options (the “Time-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Time-Based Options shall vest on each anniversary of the date of this Agreement commencing on the first anniversary of this Agreement and continuing until all Time-Based Options are vested.

(2) Performance-Based Vesting. Fifty percent (50%) of the Options shall be performance awards pursuant to Section 6.04 of the 2009 Plan (the “Performance-Based Options”) and shall vest based on the achievement of the following performance criteria as follows, subject in each case to the provisions of Sections 5 and 6 below.

(a) Ordinary Performance-Based Vesting. Two-thirds (2/3) of the Performance-Based Options (the “Ordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Ordinary Performance-Based Options shall vest on the date as of which both of the following performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds two times the Strike Price, and (y) investors achieve a 20%Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Ordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.

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(b) Extraordinary Performance-Based Vesting. One-third (1/3) of the Performance-Based Options (the “Extraordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One- third (1/3) of the Extraordinary Performance-Based Options shall vest on the date as of which both of the following extraordinary performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds three times the Strike Price, and (y) investors achieve a 25% Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Extraordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.

For the avoidance of doubt, the requisite ordinary performance and/or extraordinary performance criteria provided in clauses (x) and (y) of Section 3, Subsections A(2)(a) and A(2)(b) above, once satisfied for the initial vesting of the Ordinary Performance-Based Options and/or the Extraordinary Performance-Based Options, respectively, do not need to continue to be satisfied for vesting of the same on the subsequent two (2) anniversaries of such initial vesting.

B. Accelerated Vesting

Notwithstanding the vesting schedule provided in Section 3, Subsection A above:

(1) If the Employee’s employment is terminated by reason of (a) death or Disability or (b) Retirement, then the Time-Based Options shall vest and shall become immediately exercisable in full on the date of such termination; provided, however, that the Employee’s right to such accelerated vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, or three (3) years on the date of Retirement, unless otherwise determined by the Company in its sole discretion.

(2) If the Employee’s employment is terminated by reason of death or Disability, then the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall remain outstanding, subject to vesting only upon satisfaction of the respective criteria for the vesting of such options set forth in Section 3, Subsection A above; provided, however, that the Employee’s right to such continued vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, unless otherwise determined by the Company in its sole discretion.

C. General

The Employee shall have none of the rights of a stockholder with respect to any of the Shares subject to the Options until such Shares shall be issued in the Employee’s name or the name of the Employee’s designee following the exercise of the Options.

4. METHOD OF OPTION EXERCISE

A. Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice to the Company at its executive offices to the attention of the Corporate Secretary of the Company (the “Secretary”). Such notice shall state the election to exercise the Options, shall state the number of shares in respect of which it is being exercised (the “Purchased Shares”) and shall be signed by the person or persons so exercising the Options. In no case may the Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, the Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise the Options.

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B. Such notice shall be accompanied by (i) a personal check payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (ii) delivery to the Company of the number of Shares duly endorsed for transfer and owned by the Employee that have an aggregate Fair Market Value equal to the aggregate purchase price of the Purchased Shares or (iii) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Compensation Committee of the Board of Directors (the “Committee”). “Fair Market Value” shall have the meaning given to that term in the 2009 Plan. In addition to and at the time of payment of the purchase price, the person exercising the Options shall pay to the Company the full amount of any federal and state withholding or other taxes applicable to the taxable income of such person resulting from such exercise in cash unless the Committee in its sole discretion shall permit such taxes to be paid in Shares. Such payment may also be made in the form of payroll withholding, at the election of the option holder. The Company shall issue the Shares of the said Purchased Shares as soon as practicable after receipt of the notice and all required payments by the person or persons exercising the Options as provided in Section 4, Subsection A above. Unless the person or persons exercising the Options shall otherwise direct the Company in writing, such Shares shall be registered in the name of the person or persons so exercising the Options and shall be delivered as aforesaid to or upon the written order of the person or persons exercising the Options.

C. In the event the Options shall be exercised, pursuant to Sections 3 and 5 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Options.

D. The date of exercise of the Options shall be the date on which the notice, the documents and all payments required under this Section 4 are received by or arranged with the Secretary. If such notice is received after the market closes, the following trading day will be considered the date of exercise. All Shares that shall be purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.

E. The Company may require the Employee to exercise the Options electronically through the Shareworks system or any other online system pursuant to the procedures set forth therein as determined by the Company in its sole discretion.

F. The Company may amend the procedures set forth in Section 4, Subsections A through E in its sole discretion.

5. TERMINATION OF OPTIONS

The Options may not be exercised to any extent after termination of the Options in one of the ways, whichever first occurs, set forth below in this Section 5.

A. The Options shall terminate upon the exercise of such Options in the manner provided in this Agreement and the 2009 Plan, whether or not the Shares are ultimately delivered.

B. Except as may otherwise be provided in Section 5, Subsection C below for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date; provided, however, that in the event that the applicable ordinary performance and/or extraordinary performance conditions are achieved prior to the tenth anniversary of the Grant Date, the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall terminate on the earlier to occur of: (1) the third anniversary of the date the relevant performance criteria are achieved, or (2) the tenth anniversary of the Grant Date. For the avoidance of doubt, the achievement of performance conditions for the Performance-Based Options only will not extend the life of the Extraordinary Performance-Based Options beyond the tenth anniversary of the date of this Agreement. For the further avoidance of doubt, in the event of an employment termination described

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in Section 5, Subsection C below, all Options shall terminate on the dates detailed in Section 5, Subsection C, regardless of whether ordinary performance conditions or extraordinary performance conditions have been achieved.

C. If, prior to exercise, expiration, surrender or cancellation of the Options, the Employee’s employment terminates, the Options shall terminate in accordance with the 2009 Plan except as follows:

(1) by reason of Disability, then the Options shall terminate not later than (a) five (5) years after the date of such termination of employment or (b) the end of the Option’s term, whichever occurs first. In the event of the death of the Employee after such termination of employment, the Options shall terminate on the earlier to occur of: (i) three (3) years after the date of the Employee’s death; or (ii) the end of the Option’s term, during which period the Options may be exercised by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.

(2) by reason of death, then the Options shall terminate no later than (a) three (3) years after the date of the Employee’s death or (b) the end of the Option’s term, whichever occurs first, during which period the Options may be exercised at any time by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.

(3) by reason of termination of employment by the Company for Cause, then all Options shall terminate on such date of termination of employment.

(4) by reason of termination of employment by the Employee (subject to Section 5, Subsection C(5) below with respect to Retirement), then all unvested Options shall terminate on such date of termination of employment and all vested Options shall terminate on the date that is six (6) months after the date of such termination of employment.

(5) by reason of termination of employment by the Company without Cause or Retirement of the Employee, then if the respective performance criteria for Ordinary Performance-Based Options or Extraordinary Performance-Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the later of (x) the six (6) month anniversary of the date such Option vests, or (y) the six (6) month anniversary of the date of such termination of employment, and (ii) if the respective performance criteria for such Ordinary Performance-Based Options or Extraordinary Performance-Based Options have not been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the ninety (90) day anniversary of the date of termination of employment. Notwithstanding the foregoing, if the respective performance criteria for the Ordinary Performance-Based Options or the Extraordinary Performance Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, the Company will have the right in its sole discretion to require the Employee to exercise all or part of such Ordinary Performance-Based Options or such Extraordinary Performance-Based Options at any time. For the avoidance of doubt, in no event shall this Section 5, Subsection C(4) extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.

D. The Employee’s right to retain any Options following termination of employment under this Section 5 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of such termination of employment, or three (3) years in the case of Retirement, unless otherwise determined by the Company in its sole discretion.

Page 4 of 10

6. CONDITIONS UPON TERMINATION OF EMPLOYMENT

A. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not (A) engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company, (B) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire or engagement as an independent contractor elsewhere, (C) in any way interfere with the relationship between any customer, supplier, licensee or business relation of the Company or (D) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted by Company.

B. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times for consultations at the request of the Company’s management with respect to phases of the business with which the Employee was actively connected during the Employee’s employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.

C. The Employee acknowledges that the Company would not have awarded the Options granted to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.

D. In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies available to the Company at law or in equity (a) the Options, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the market value (on the date of exercise) of any Shares acquired on exercise of the Options less the exercise price paid for such Shares (the “Share Value”) to the extent such Shares were acquired by the Employee upon exercise of the Options at any time from 180 days prior to the earlier of (i) the date of termination of employment or (ii) the date the Employee fails to comply with any promise made in this Section 6, to 180 days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount (either in cash or in Shares) to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company.

E. The Employee further acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 6, Subsection (D) above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants.

F. Any determination by the Board of Directors with regard to Section 6, Subsections (D) and (E) shall be conclusive.

7. ADJUSTMENT UPON CHANGES IN STOCK; CHANGE OF CONTROL/RESTRUCTURING EVENT

A. Except to the extent governed by Section 7, Subsection (B) below, if there shall be any change in the Shares subject to the Options granted hereunder, through merger, consolidation, reorganization,

Page 5 of 10

recapitalization, stock dividend, stock split, spin off of one or more subsidiaries or other change in the corporate structure, appropriate adjustments shall be made by the Board of Directors in its discretion (or if the Company is not the surviving company in any such transaction, the Board of Directors of the surviving company – with the Board of Directors of the Company and the surviving company collectively referred to in this Section 7 as the “Board”) in the aggregate number and kind of shares subject to the 2009 Plan and the number and kind of shares and the price per share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such a corporate transaction or restructuring. Without limiting the generality of the foregoing, in the event of a restructuring or transaction resulting in some or all of the Company’s Shares being convertible into equity of a separate company, the Board shall have the authority to replace outstanding Options with any one or more of the following: (A) adjusted options of the Company; (B) adjusted options on the equity of the separate company; and (C) a combination of adjusted options on the shares of both the Company and the separate company, all as the Board sees as equitable. In the event of any such option adjustment and/or conversion, the Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement. For the avoidance of doubt, in the event Employee remains employed with the separate company that results from a restructuring or transaction covered by this Section 7, for purposes of this Agreement, the Employee will be deemed to remain employed as if the Employee continued employment with the Company such that the employment termination provisions applicable to Options shall not be invoked unless and until the Employee’s employment with such separate company shall terminate.

B. If a Change of Control/Restructuring Event occurs, the acquiring person or entity shall have the right to cancel the Options in exchange for a payment equal to the then intrinsic value of the Options as determined by the Board, effective as of the Change of Control/Restructuring Date, or to allow the Options to continue in full force and effect in accordance with the terms hereof. If the Options are to remain in place following such Change of Control/Restructuring Event, the Board shall have the right in its discretion to make appropriate adjustments in the aggregate number and kind of Shares and the price per Share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such Change of Control/Restructuring Event. Such discretions shall include the authority to replace outstanding Options with any one or more of the following: (a) adjusted options of the Company; (b) adjusted options on the equity of any separate company surviving such Change of Control/Restructuring event; and (c) a combination of adjusted options on the shares of both the Company and the separate company, as such Board sees as equitable. In the event of any such option adjustment and/or conversion, such Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement.

C. The 2009 Plan and Agreement and the awards granted hereunder shall not affect the right of the Company to reclassify, recapitalize, issue equity or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, wind up or otherwise reorganize. The Board of Directors shall have the discretion to make adjustments to the awards made hereunder to reflect any changes that the Board of Directors deems appropriate as a result of any sale, an IPO, business combination, acquisition, recapitalization, reclassification, merger, consolidation, reorganization, stock dividend, stock split, spin off of one or more divisions or subsidiaries, a “going private” transaction (which shall mean any transaction that results in the occurrence of any of the following events: (i) Altisource’s common stock is no longer listed on any national securities exchange or quoted on the Nasdaq National Market or other securities quotation system; (ii) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (iii) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the awards. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the awards made hereunder to avoid inequitable dilution or enlargement of award

Page 6 of 10

values or rights in connection with any such event (as determined by the Board of Directors in its sole discretion based on any facts and circumstances it considers relevant). For the avoidance of doubt, the awards are subject to the dilutive impact of equity issuances (including an IPO) or other costs of capital made in connection with acquisitions or capital raises.

8. NON-TRANSFERABILITY OF OPTIONS

The Options shall not be transferable otherwise than by will or by the applicable laws of descent and distribution. More particularly (but without limiting the generality of the foregoing), the Options may not be assigned, transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Options contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Options, shall be null and void and without effect.

9. PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS

The Company shall at all times during the term of the Options reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and/or transfer taxes with respect to the issue and/or transfer of Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

10. DEFINITIONS

A. As used herein, the term “Annualized Rate of Return” shall be determined as a function of the Corporation’s stock price appreciation and dividends and other distributions over the Strike Price. For this purpose, dividends and other distributions shall be deemed reinvested in stock of the Company on the date such dividends and distributions are paid to shareholders. The Committee shall make all determinations of Annualized Rate of Return under this Agreement at its sole discretion.

B. As used herein, the term “Cause” shall mean, as reasonably determined by the Board of Directors (excluding the Employee, if the Employee is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement, whether or not committed in the course of the Employee’s employment with the Company.

C. As used herein, “Change of Control/Restructuring Date” shall mean either the date (i) which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or (ii) a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”

D. As used herein, a “Change of Control/Restructuring Event” shall mean (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a

Page 7 of 10

reduction of the interest in the Company’s stock of the pre-transaction stockholders to less than fifty percent (50%) of the post-transaction ownership. To the extent the Employee’s employment agreement conflicts with the Change of Control/Restructuring Event definition set forth in the immediately preceding sentence, the Employee’s employment agreement will govern.

E. As used herein, the term “Confidential Information” shall mean all information relating to Company, including any of its subsidiaries, customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.

F. As used herein, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.

G. As used herein, the term “Retirement” shall mean termination (other than by reason of death or Disability) of the Employee’s employment with the Company or one of its subsidiaries pursuant to and in accordance with a plan or program of the Company or subsidiary applicable to the Employee provided, however, that for purposes of this Agreement only, the Employee must have attained the age of sixty (60) and been an employee of the Company for not less than three (3) years as of the date of termination of employment by reason of Retirement.

11. AMENDMENT

In the event that the Board of Directors shall amend the 2009 Plan under the provisions of Section 9 of the 2009 Plan and such amendment shall modify or otherwise affect the subject matter of this Agreement, this Agreement shall, to that extent, be deemed to be amended by such amendment to the 2009 Plan. The Company shall notify the Employee in writing of any such amendment to the 2009 Plan and this Agreement as soon as practicable after its approval. Notwithstanding any other provision of this Agreement or the 2009 Plan, the Employee’s Options under this Agreement may not be amended in a way that materially diminishes the value of the Options without the Employee’s consent to the amendment.

12. CONSTRUCTION

In the event of any conflict between the 2009 Plan and this Agreement, the provisions of the 2009 Plan shall control. This Agreement shall be governed in all respects by the laws of the State of Georgia. No provision of this Agreement

Page 8 of 10

shall limit in any way whatsoever any right that the Company may otherwise have to terminate the employment of the Employee at any time.

If any provision of this Agreement is held to be unenforceable, then this provision will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

13. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Company and the Employee and supersedes all other discussions, correspondence, representations, understandings and agreements between the parties, with respect to the subject matter hereof.

14. HEADINGS

The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed a part hereof.

15. CONFIRMING INFORMATION

By accepting this Agreement, either through electronic means or by providing a signed copy, the Employee (i) acknowledges and confirms that the Employee has read and understood the 2009 Plan and the Agreement and (ii) acknowledges that acceptance through electronic means is equivalent to doing so by providing a signed copy.

[SIGNATURE PAGE FOLLOWS]

Page 9 of 10

I hereby agree to and accept the terms of this Agreement.

Employee

_______________________________

Vivek Bhandari

Altisource Portfolio Solutions S.A.

By: ___________________________

Name: William B. Shepro

Title: Chief Executive Officer

Attested by: ____________________

Name: Kevin J. Wilcox

Title: Chief Administration and Risk Officer

Page 10 of 10

EX-31.1

Exhibit 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, William B. Shepro, hereby certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2016 of Altisource Portfolio Solutions S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 27, 2016	By:	/s/ William B. Shepro
			William B. Shepro
			Director and Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michelle D. Esterman, hereby certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2016 of Altisource Portfolio Solutions S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 27, 2016	By:	/s/ Michelle D. Esterman
			Michelle D. Esterman
			Chief Financial Officer
			(Principal Financial Officer and  Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(UNITED STATES CODE, TITLE 18, CHAPTER 63, SECTION 1350)

ACCOMPANYING QUARTERLY REPORT ON FORM 10-Q OF

ALTISOURCE PORTFOLIO SOLUTIONS S.A. FOR THE QUARTER ENDED

SEPTEMBER 30, 2016

In connection with the Quarterly Report on Form 10-Q of Altisource Portfolio Solutions S.A. (the “Company”) for the quarterly period ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William B. Shepro, as Chief Executive Officer of the Company, and Michelle D. Esterman, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ William B. Shepro	By:	/s/ Michelle D. Esterman
	William B. Shepro		Michelle D. Esterman
	Director and Chief Executive Officer		Chief Financial Officer
	(Principal Executive Officer)		(Principal Financial Officer and  Principal Accounting Officer)
	October 27, 2016		October 27, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 21, 2016
Document and Entity Information
Entity Registrant Name	Altisource Portfolio Solutions S.A.
Entity Central Index Key	0001462418
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		18,877,614
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 134,948,000	$ 179,327,000
Available for sale securities	45,174,000	0
Accounts receivable, net	101,580,000	105,023,000
Prepaid expenses and other current assets	31,927,000	21,751,000
Total current assets	313,629,000	306,101,000
Premises and equipment, net	109,785,000	119,121,000
Goodwill	89,905,000	82,801,000
Intangible assets, net	162,976,000	197,003,000
Deferred tax assets, net	4,847,000	3,619,000
Other assets	12,190,000	13,153,000
Total assets	693,332,000	721,798,000
Current liabilities:
Accounts payable and accrued expenses	101,361,000	91,871,000
Current portion of long-term debt	5,945,000	5,945,000
Deferred revenue	10,927,000	15,060,000
Other current liabilities	13,846,000	16,266,000
Total current liabilities	132,079,000	129,142,000
Long-term debt, less current portion	468,689,000	522,233,000
Other non-current liabilities	13,790,000	18,153,000
Commitments, contingencies and regulatory matters (Note 22)
Equity:
Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,878 outstanding as of September 30, 2016; 25,413 shares authorized and issued and 19,021 outstanding as of December 31, 2015)	25,413,000	25,413,000
Additional paid-in capital	101,013,000	96,321,000
Retained earnings	359,435,000	369,270,000
Accumulated other comprehensive loss	(2,156,000)	0
Treasury stock, at cost (6,535 shares as of September 30, 2016 and 6,392 shares as of December 31, 2015)	(406,559,000)	(440,026,000)
Altisource equity	77,146,000	50,978,000
Non-controlling interests	1,628,000	1,292,000
Total equity	78,774,000	52,270,000
Total liabilities and equity	$ 693,332,000	$ 721,798,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 1.00	$ 1.00
Common stock, shares authorized (in shares)	25,413,000	25,413,000
Common stock, shares issued (in shares)	25,413,000	25,413,000
Common stock, shares outstanding (in shares)	18,878,000	19,021,000
Treasury stock, shares (in shares)	6,535,000	6,392,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue	$ 252,745	$ 272,776	$ 758,676	$ 781,579
Cost of revenue	174,002	173,850	517,236	514,835
Gross profit	78,743	98,926	241,440	266,744
Selling, general and administrative expenses	53,886	51,338	161,709	155,310
Change in the fair value of Equator Earn Out	0	0	0	(7,591)
Income from operations	24,857	47,588	79,731	119,025
Other income (expense), net:
Interest expense	(5,952)	(7,041)	(18,481)	(21,396)
Loss on HLSS equity securities and dividends received, net	0	0	0	(1,854)
Other income (expense), net	(109)	653	2,608	1,477
Total other income (expense), net	(6,061)	(6,388)	(15,873)	(21,773)
Income before income taxes and non-controlling interests	18,796	41,200	63,858	97,252
Income tax provision	(7,324)	(3,303)	(12,808)	(8,101)
Net income	11,472	37,897	51,050	89,151
Net income attributable to non-controlling interests	(883)	(851)	(1,973)	(2,457)
Net income attributable to Altisource	$ 10,589	$ 37,046	$ 49,077	$ 86,694
Earnings per share:
Basic (in usd per share)	$ 0.57	$ 1.94	$ 2.63	$ 4.42
Diluted (in usd per share)	$ 0.54	$ 1.82	$ 2.49	$ 4.19
Weighted average shares outstanding:
Basic (in shares)	18,715	19,091	18,669	19,608
Diluted (in shares)	19,568	20,411	19,738	20,688
Comprehensive income:
Unrealized gain (loss) on securities, net of income tax benefit (provision) of $(2,070), $0, $889, $0	$ 5,016	$ 0	$ (2,156)	$ 0
Comprehensive income, net of tax	16,488	37,897	48,894	89,151
Comprehensive income attributable to non-controlling interests	(883)	(851)	(1,973)	(2,457)
Comprehensive income attributable to Altisource	$ 15,605	$ 37,046	$ 46,921	$ 86,694

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Income tax benefit (provision) on securities	$ (2,070)	$ 0	$ 889	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Treasury stock, at cost	Non-controlling interests
Balance at Dec. 31, 2014	$ 41,443	$ 25,413	$ 91,509	$ 367,967	$ 0	$ (444,495)	$ 1,049
Balance (in shares) at Dec. 31, 2014		25,413
Increase (Decrease) in Equity
Net income	89,151			86,694			2,457
Other comprehensive loss, net of tax	0
Distributions to non-controlling interest holders	(2,144)						(2,144)
Share-based compensation expense	3,258		3,258
Exercise of stock options	332			(2,054)		2,386
Issuance of restricted shares for CastleLine acquisition	14,427			(21,612)		36,039
Repurchase of shares	(48,971)					(48,971)
Balance at Sep. 30, 2015	97,496	$ 25,413	94,767	430,995	0	(455,041)	1,362
Balance (in shares) at Sep. 30, 2015		25,413
Balance at Dec. 31, 2015	52,270	$ 25,413	96,321	369,270	0	(440,026)	1,292
Balance (in shares) at Dec. 31, 2015		25,413
Increase (Decrease) in Equity
Net income	51,050			49,077			1,973
Other comprehensive loss, net of tax	(2,156)				(2,156)
Distributions to non-controlling interest holders	(1,637)						(1,637)
Share-based compensation expense	4,692		4,692
Exercise of stock options	8,876			(58,912)		67,788
Repurchase of shares	(34,321)					(34,321)
Balance at Sep. 30, 2016	$ 78,774	$ 25,413	$ 101,013	$ 359,435	$ (2,156)	$ (406,559)	$ 1,628
Balance (in shares) at Sep. 30, 2016		25,413

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 51,050	$ 89,151
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	27,521	27,637
Amortization of intangible assets	36,432	27,995
Loss on HLSS equity securities and dividends received, net	0	1,854
Change in the fair value of acquisition related contingent consideration	(1,174)	(7,302)
Share-based compensation expense	4,692	3,258
Bad debt expense	763	3,477
Gain on early extinguishment of debt	(5,464)	(1,986)
Amortization of debt discount	307	379
Amortization of debt issuance costs	850	1,045
Deferred income taxes	17	54
Loss on disposal of fixed assets	30	50
Changes in operating assets and liabilities:
Accounts receivable	3,505	(19,681)
Prepaid expenses and other current assets	(10,167)	2,001
Other assets	496	2,085
Accounts payable and accrued expenses	7,005	(20,876)
Other current and non-current liabilities	(9,828)	10
Net cash provided by operating activities	106,035	109,151
Cash flows from investing activities:
Additions to premises and equipment	(16,525)	(27,670)
Acquisition of businesses, net of cash acquired	(9,617)	(11,193)
Purchase of available for sale securities	(48,219)	(29,966)
Proceeds received from sale of and dividends from HLSS equity securities	0	28,112
Other investing activities	266	722
Net cash used in investing activities	(74,095)	(39,995)
Cash flows from financing activities:
Repayment and repurchases of long-term debt	(49,237)	(29,087)
Proceeds from stock option exercises	8,876	332
Purchase of treasury stock	(34,321)	(48,971)
Distributions to non-controlling interests	(1,637)	(2,144)
Other financing activities	0	(500)
Net cash used in financing activities	(76,319)	(80,370)
Net decrease in cash and cash equivalents	(44,379)	(11,214)
Cash and cash equivalents at the beginning of the period	179,327	161,361
Cash and cash equivalents at the end of the period	134,948	150,147
Supplemental cash flow information:
Interest paid	17,244	19,770
Income taxes paid, net	14,178	6,638
Non-cash investing and financing activities:
Acquisition of businesses with restricted shares	0	14,427
Increase (decrease) in payables for purchases of premises and equipment	$ 2,458	$ (5,326)

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ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

Altisource Portfolio Solutions S.A., together with its subsidiaries (which may be referred to as “Altisource,” the “Company,” “we,” “us” or “our”), is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. Altisource’s proprietary business processes, vendor and electronic payment management software and behavioral science-based analytics improve outcomes for marketplace participants.

We were formed under the laws of Luxembourg and are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.”

We conduct our operations through three reportable segments: Mortgage Services, Financial Services and Technology Services. In addition, we report our corporate related expenditures and eliminations separately (see Note 23 for a description of our business segments).

Basis of Accounting and Presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation.

Altisource consolidates two cooperative entities which are managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource: Best Partners Mortgage Cooperative, Inc., a mortgage cooperative doing business as Lenders One^® (“Lenders One”) and Best Partners Mortgage Brokers Cooperative, Inc., a mortgage cooperative doing business as Wholesale One^® (“Wholesale One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option) and to Wholesale One under a management agreement that ends on July 8, 2039 (with automatic renewals for three successive five-year periods).

The management agreements between MPA and Lenders One and between MPA and Wholesale One, pursuant to which MPA is the management company, represent variable interests in variable interest entities. MPA is the primary beneficiary of Lenders One and Wholesale One as it has the power to direct the activities that most significantly impact each of these cooperatives’ economic performance and the right to receive benefits from each of these cooperatives. As a result, Lenders One and Wholesale One are presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. As of September 30, 2016, Lenders One had total assets of $4.0 million and total liabilities of $1.9 million. As of December 31, 2015, Lenders One had total assets of $4.9 million and total liabilities of $3.7 million. As of September 30, 2016 and December 31, 2015, Wholesale One had less than $0.1 million in total assets and less than $0.1 million in total liabilities.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 15, 2016.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1 — Quoted prices in active markets for identical assets and liabilities

Level 2 — Observable inputs other than quoted prices included in Level 1

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Recently Adopted Accounting Pronouncement

On January 1, 2016, Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, became effective. As a result of this accounting change, the Company now presents debt issuance costs, net as a direct deduction from the related debt (see Note 12). Prior to January 1, 2016, debt issuance costs, net were included in other assets. We adopted the standard retrospectively. Accordingly, prior period amounts were reclassified to conform to the current presentation.

Future Adoption of New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of this standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This standard will require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. It also amends certain financial statement presentation and disclosure requirements associated with the fair value of financial instruments. This standard will be effective for annual periods beginning after December 31, 2017, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard introduces a new lessee model that brings substantially all leases on the balance sheet. The standard will require companies to recognize lease assets and lease liabilities on their balance sheets and disclose key information about leasing arrangements in their financial statements. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard clarifies guidance on principal versus agent considerations in connection with revenue recognition. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard will require companies to recognize all award-related excess tax benefits and tax deficiencies in their income statements, classify any excess tax benefits as an operating activity in their statements of cash flows, provide companies with the option of estimating forfeitures or recognizing forfeitures as they occur, modify the statutory tax withholding requirements and classify cash paid by employers when directly withholding shares for tax withholding purposes as an investing activity in their statements of cash flows. This standard will be effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard provides guidance on identifying performance obligations in a contract with a customer and clarifying several licensing considerations, including whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time) and guidance on sales-based and usage-based royalties. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard addresses collectability, sales taxes and other similar taxes collected from customers, non-cash consideration, contract modifications at transition and completed contracts at transition. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its statement of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.  This standard will require that companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs.  Current guidance prohibits companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party.  This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period.  Early adoption of this standard is permitted.  The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

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CUSTOMER CONCENTRATION

9 Months Ended

Sep. 30, 2016

Risks and Uncertainties [Abstract]

CUSTOMER CONCENTRATION

CUSTOMER CONCENTRATION

Ocwen Financial Corporation together with its subsidiaries (“Ocwen”) is our largest customer. Ocwen purchases certain mortgage services and technology services from us under the terms of master services agreements and amendments thereto (collectively, the “Service Agreements”) with terms extending through August 2025. Certain of the Service Agreements, among other things, contain a “most favored nation” provision and the parties to the Service Agreements have the right to renegotiate pricing. Certain of the Service Agreements also prohibit Ocwen from establishing fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward Residential, Inc. and Residential Capital, LLC servicing portfolios acquired by Ocwen in December 2012 and February 2013, respectively. In addition, Ocwen purchases certain origination services from Altisource under an agreement that extends through January 2017.

Revenue from Ocwen primarily consists of revenue earned directly from Ocwen and revenue earned from the loans serviced by Ocwen when Ocwen designates us as the service provider. Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Mortgage Services	59	%	64	%	59	%	63	%
Financial Services	16	%	16	%	17	%	20	%
Technology Services	41	%	51	%	41	%	52	%
Consolidated revenue	56	%	60	%	56	%	59	%

For the nine months ended September 30, 2016 and 2015, we generated revenue from Ocwen of $422.2 million and $464.8 million, respectively ($141.6 million and $163.8 million for the third quarter of 2016 and 2015, respectively). Services provided to Ocwen during such periods and reported in the Mortgage Services segment included real estate asset management and sales, residential property valuation, trustee management services, property inspection and preservation services and insurance services. Services provided to Ocwen and reported in the Financial Services segment included mortgage charge-off collections. Services provided to Ocwen and reported in the Technology Services segment included information technology infrastructure management and software applications. As of September 30, 2016, accounts receivable from Ocwen totaled $32.6 million, $21.8 million of which was billed and $10.8 million of which was unbilled. As of December 31, 2015, accounts receivable from Ocwen totaled $38.2 million, $20.4 million of which was billed and $17.8 million of which was unbilled.

We earn additional revenue related to the portfolios serviced by Ocwen when a party other than Ocwen selects Altisource as the service provider. For the nine months ended September 30, 2016 and 2015, we recognized revenue of $146.0 million and $164.7 million, respectively ($48.0 million and $56.7 million for the third quarter of 2016 and 2015, respectively), related to the portfolios serviced by Ocwen when a party other than Ocwen selected Altisource as the service provider. These amounts are not included in deriving revenue from Ocwen as a percentage of revenue in the table above.

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TRANSACTIONS WITH RELATED PARTIES

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH RELATED PARTIES

Through January 16, 2015, William C. Erbey served as our Chairman as well as the Executive Chairman of Ocwen and Chairman of each of Home Loan Servicing Solutions, Ltd. (“HLSS”), Altisource Residential Corporation (“Residential”) and Altisource Asset Management Corporation (“AAMC”). Effective January 16, 2015, Mr. Erbey stepped down as the Executive Chairman of Ocwen and Chairman of each of Altisource, HLSS, Residential and AAMC and is no longer a member of the Board of Directors of any of these companies. Consequently, these companies are no longer related parties of Altisource, as defined by FASB ASC Topic 850, Related Party Disclosures. The disclosures in this note are limited to the periods that each of Ocwen, HLSS, Residential and AAMC were related parties of Altisource and are not necessarily reflective of current activities with these former related parties.

Ocwen

Revenue

For the period from January 1, 2015 through January 16, 2015, we estimated that we generated revenue from Ocwen of $22.9 million. Services provided to Ocwen during such period included real estate asset management and sales, residential property valuation, trustee management services, property inspection and preservation, insurance services, charge-off mortgage collections, information technology infrastructure management and software applications.

We record revenue we earn from Ocwen under the Service Agreements at rates we believe to be comparable market rates as we believe they are consistent with the fees we charge to other customers and/or fees charged by our competitors for comparable services.

Cost of Revenue and Selling, General and Administrative Expenses

At times, we have used Ocwen’s contractors and/or employees to support Altisource related services. Ocwen generally billed us for these contractors and/or employees based on their fully-allocated cost. Additionally, through March 31, 2015, we purchased certain data relating to Ocwen’s servicing portfolio in connection with a Data Access and Services Agreement. Based upon our previously provided notice, the Data Access and Services Agreement was terminated effective March 31, 2015. For the period from January 1, 2015 through January 16, 2015, we estimated that we incurred $1.9 million of expenses related to these items. These amounts are reflected as a component of cost of revenue in the condensed consolidated statements of operations and comprehensive income.

We provided certain other services to Ocwen and Ocwen provided certain other services to us in connection with Support Services Agreements. These services primarily included such areas as vendor management, corporate services and facilities related services. Billings for these services were generally based on the fully-allocated cost of providing the service based on an estimate of the time and expense of providing the service or estimates thereof. Of the January 2015 billings to Ocwen, we estimated that $0.1 million related to the period from January 1, 2015 through January 16, 2015. Of the January 2015 billings from Ocwen, we estimated that $0.3 million related to the period from January 1, 2015 through January 16, 2015. These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

HLSS

Prior to April 2015, HLSS was a publicly traded company whose primary objective was the acquisition of mortgage servicing rights and related servicing advances, loans held for investment and other residential mortgage related assets. We provided HLSS certain finance, human resources, tax and facilities services and sold information technology services to HLSS under a support services agreement. For the period from January 1, 2015 through January 16, 2015, our billings to HLSS were immaterial.

Residential and AAMC

Residential is focused on providing quality, affordable rental homes to families throughout the United States. AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles that own real estate related assets. Its initial client is Residential.

We have agreements and amendments thereto, which extend through 2027, to provide Residential with renovation management, lease management, property management, real estate owned asset management, title insurance, settlement and valuation services. In addition, we have agreements with Residential and AAMC pursuant to which we may provide services such as finance, human resources, facilities, technology and insurance risk management. Further, we have separate agreements for certain services related to income tax matters, trademark licenses and technology products and services.

For the period from January 1, 2015 through January 16, 2015, we estimated that we generated revenue from Residential of $1.0 million. This amount is reflected in revenue in the condensed consolidated statements of operations and comprehensive income. This excludes revenue from services we provide to Residential’s loans serviced by Ocwen or other loan servicers where we were retained by Ocwen or Residential’s other loan servicers.

For the period from January 1, 2015 through January 16, 2015, our billings to AAMC were immaterial.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

Granite Acquisition

On July 29, 2016, we acquired certain assets and assumed certain liabilities of Granite Loan Management of Delaware, LLC (“Granite”) for $9.6 million in cash at closing. Granite provides residential and commercial loan disbursement processing, risk mitigation and construction inspection services to lenders.The Granite acquisition is not material in relation to the Company’s results of operations or financial position.

The preliminary allocation of the purchase price is as follows:

(in thousands)
Accounts receivable, net	$	1,103
Prepaid expenses	25
Other assets	25
Premises and equipment, net	299
Goodwill	8,449
	9,901
Accounts payable and accrued expenses	(111		)
Other current liabilities	(173		)
Purchase price	$	9,617

RentRange, Investability and Onit Solutions Acquisitions

On October 9, 2015, we acquired GoldenGator, LLC (doing business as RentRange^®) (“RentRange”), REIsmart, LLC (doing business as Investability^™) (“Investability”) and Onit Solutions, LLC, a support company for RentRange and Investability (collectively “RentRange and Investability”) for $24.8 million. RentRange is a leading provider of rental home data and information to the financial services and real estate industries, delivering a wide assortment of address and geography level data, analytics and rent-based valuation solutions for single and multi-family properties. Investability is an online residential real estate search and acquisition platform that utilizes data and analytics to allow real estate investors to access the estimated cash flow, capitalization rate, net yield and market value of properties for sale in the United States. The purchase price was composed of $17.5 million in cash and 247 thousand shares of restricted common stock of the Company with a value of $7.3 million as of the closing date. Upon issuance, the restricted shares were subject to transfer restrictions and potential forfeiture provisions. These restrictions and forfeiture provisions will lapse over a four year period, subject to the recipients meeting certain continued employment conditions with the Company and the satisfaction of certain acquisition related escrow release conditions. During the third quarter of 2016, management adjusted the allocation of the purchase price based upon information that subsequently became available relating to acquisition date working capital and the purchase price allocation to intangible assets. The working capital adjustment resulted in an obligation of the sellers to pay the Company $0.2 million. RentRange and Investability are not material in relation to the Company’s results of operations or financial position.

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	3		$	—		$	3
Accounts receivable, net	245			(76		)	169
Premises and equipment, net	2,471			(1,067		)	1,404
Other assets	199			(196		)	3
Trademarks and trade names	1,205			—			1,205
Databases/other	910			1,035			1,945
Non-compete agreements	330			—			330
Customer relationships	255			—			255
Goodwill	19,565			50			19,615
	25,183			(254		)	24,929
Accounts payable and accrued expenses	(391		)	46			(345		)
Purchase price	$	24,792		$	(208	)	$	24,584

CastleLine Acquisition

On July 17, 2015, we acquired CastleLine Holdings, LLC and its subsidiaries (“CastleLine”) for $33.4 million. CastleLine is a specialty risk management and insurance services firm that provides financial products and services to parties involved in the origination, underwriting, purchase and securitization of residential mortgages. The purchase consideration was composed of $12.3 million of cash at closing, $10.5 million of cash payable over four years from the acquisition date and 495 thousand shares of restricted common stock of the Company, that were subject to transfer restrictions, with a value of $14.4 million as of the closing date. Of the cash payable following acquisition, $3.8 million is contingent on certain future employment conditions of certain of the sellers, and therefore excluded from the purchase price. During the second quarter of 2016, management adjusted the allocation of the purchase price based upon information that subsequently became available relating to acquisition date working capital and the purchase price allocation to intangible assets. The CastleLine acquisition is not material in relation to the Company’s results of operations or financial position.

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	1,088		$	—		$	1,088
Accounts receivable, net	510			(410		)	100
Prepaid expenses	66			(46		)	20
Restricted cash	2,501			—			2,501
Non-compete agreements	1,105			25			1,130
Databases/other	465			1,335			1,800
Customer relationships	395			—			395
Trademarks and trade names	150			10			160
Deferred taxes	—			356			356
Goodwill	28,125			(1,395		)	26,730
	34,405			(125		)	34,280
Accounts payable and accrued expenses	(875		)	38			(837		)
Deferred revenue	(87		)	87			—
Purchase price	$	33,443		$	—		$	33,443

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AVAILABLE FOR SALE SECURITIES

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

AVAILABLE FOR SALE SECURITIES

AVAILABLE FOR SALE SECURITIES

During the nine months ended September 30, 2016, we purchased 4.1 million shares of Residential common stock for $48.2 million (no comparative amount in the third quarter of 2016). This investment is classified as available for sale and reflected in the condensed consolidated balance sheets at fair value at the balance sheet date ($45.2 million as of September 30, 2016) (no comparative amount as of December 31, 2015). Unrealized gains and losses on available for sale securities are reflected in other comprehensive income, unless there is an impairment that is other than temporary. In the event that a decline in market value is other than temporary, we would record a charge to earnings and a new cost basis in the investment would be established. During the nine months ended September 30, 2016, we incurred expenses of $3.4 million and earned dividends of $1.0 million related to this investment (no comparative amounts in 2015).

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ACCOUNTS RECEIVABLE, NET

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Billed	$	63,066		$	67,021
Unbilled	48,288			56,458
	111,354			123,479
Less: allowance for doubtful accounts	(9,774		)	(18,456		)
Total	$	101,580		$	105,023

Unbilled receivables consist primarily of certain asset management and default management services for which we generally recognize revenues over the service delivery period but bill following completion of the service. We also include amounts in unbilled receivables that are earned during a month and billed in the following month.

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PREPAID EXPENSES AND OTHER CURRENT ASSETS

9 Months Ended

Sep. 30, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Maintenance agreements, current portion	$	7,213	$	7,000
Short-term investments in real estate	8,695		—
Income taxes receivable	3,132		633
Prepaid expenses	6,166		7,873
Other current assets	6,721		6,245
Total	$	31,927	$	21,751

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PREMISES AND EQUIPMENT, NET

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT, NET

PREMISES AND EQUIPMENT, NET

Premises and equipment, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Computer hardware and software	$	163,140		$	177,010
Office equipment and other	19,586			21,720
Furniture and fixtures	13,792			14,443
Leasehold improvements	35,726			35,503
	232,244			248,676
Less: accumulated depreciation and amortization	(122,459		)	(129,555		)
Total	$	109,785		$	119,121

Depreciation and amortization expense amounted to $27.5 million and $27.6 million for the nine months ended September 30, 2016 and 2015, respectively ($9.2 million and $9.2 million for the third quarter of 2016 and 2015, respectively), and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying condensed consolidated statements of operations and comprehensive income.

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GOODWILL AND INTANGIBLE ASSETS, NET

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following is a summary of goodwill by segment:

(in thousands)	Mortgage Services			Financial Services		Total
Balance as of December 31, 2015	$	80,423		$	2,378	$	82,801
Acquisition of CastleLine (1)	(1,395		)	—		(1,395		)
Acquisitions of RentRange and Investability (2)	50			—		50
Acquisition of Granite	8,449			—		8,449
Balance as of September 30, 2016	$	87,527		$	2,378	$	89,905

⁽¹⁾  During the second quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the CastleLine acquisition. See Note 4.

⁽²⁾  During the third quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the RentRange and Investability acquisition. See Note 4.

Intangible assets, net

Intangible assets, net consist of the following:

	Weighted average estimated useful life (in years)	Gross carrying amount				Accumulated amortization						Net book value
(in thousands)		September 30, 2016		December 31, 2015		September 30, 2016			December 31, 2015			September 30, 2016		December 31, 2015
Definite lived intangible assets:
Trademarks and trade names	13	$	15,254	$	15,244	$	(7,419	)	$	(6,491	)	$	7,835	$	8,753
Customer related intangible assets	10	274,428		274,428		(146,890		)	(113,725		)	127,538		160,703
Operating agreement	20	35,000		35,000		(11,667		)	(10,354		)	23,333		24,646
Non-compete agreements	4	1,460		1,435		(405		)	(115		)	1,055		1,320
Intellectual property	10	300		300		(78		)	(55		)	222		245
Other intangible assets	5	3,745		1,375		(752		)	(39		)	2,993		1,336
Total		$	330,187	$	327,782	$	(167,211	)	$	(130,779	)	$	162,976	$	197,003

Amortization expense for definite lived intangible assets was $36.4 million and $28.0 million for the nine months ended September 30, 2016 and 2015, respectively ($11.5 million and $10.1 million for the third quarter of 2016 and 2015, respectively). Expected annual definite lived intangible asset amortization for 2016 through 2020 is $47.7 million, $34.6 million, $26.1 million, $20.7 million and $16.8 million, respectively.

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OTHER ASSETS

9 Months Ended

Sep. 30, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER ASSETS

OTHER ASSETS

Other assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Security deposits	$	5,599	$	5,341
Maintenance agreements, non-current portion	1,177		1,570
Restricted cash	4,505		4,801
Other	909		1,441
Total	$	12,190	$	13,153

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ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2016

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Accounts payable	$	16,940	$	11,644
Accrued expenses - general	34,148		30,347
Accrued salaries and benefits	46,417		46,564
Income taxes payable	3,856		3,316
Total	$	101,361	$	91,871

Other current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Unfunded cash account balances	$	2,995	$	6,395
Other	10,851		9,871
Total	$	13,846	$	16,266

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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Senior secured term loan	$	481,140		$	536,598
Less: debt issuance costs, net	(4,778		)	(6,184		)
Less: unamortized discount, net	(1,728		)	(2,236		)
Net long-term debt	474,634			528,178
Less: current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	468,689		$	522,233

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain wholly-owned subsidiaries are guarantors of the term loan (collectively, the “Guarantors”). We subsequently amended the senior secured term loan agreement to increase the principal amount of the senior secured term loan and, among other changes, re-establish the $200.0 million incremental term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year and increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement).

After giving effect to the third amendment entered into on August 1, 2014, the term loan must be repaid in equal consecutive quarterly principal installments of $1.5 million, which commenced on September 30, 2014, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement will become due on the earlier of (i) December 9, 2020 and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders or as otherwise provided in the senior secured term loan agreement upon the occurrence of any event of default under the senior secured term loan agreement.

In addition to the scheduled principal payments, subject to certain exceptions, the term loan is subject to mandatory prepayment upon issuances of debt, casualty and condemnation events and sales of assets, as well as from a percentage of Consolidated Excess Cash Flow if the leverage ratio is greater than 3.00 to 1.00, as calculated in accordance with the provisions of the senior secured term loan agreement (the percentage increases if the leverage ratio exceeds 3.50 to 1.00). No mandatory prepayments were owed for the nine months ended September 30, 2016.

During the nine months ended September 30, 2016, we repurchased portions of our senior secured term loan with an aggregate par value of $51.0 million at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt (no repurchases in the third quarter of 2016). During the nine months ended September 30, 2015, we repurchased portions of our senior secured term loan with an aggregate par value of $27.0 million at a weighted average discount of 9.8%, recognizing a net gain of $2.0 million on the early extinguishment of debt (repurchased aggregate par value of $11.0 million at a weighted average discount of 11.0%, recognizing a net gain of $0.9 million on the early extinguishment of debt for the third quarter of 2015). The net gains were included in other income (expense), net in the condensed consolidated statements of operations and comprehensive income.

The term loan bears interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Base Rate and (y) 2.00% plus (ii) a 2.50% margin. The interest rate at September 30, 2016 was 4.50%.

Term loan payments are guaranteed by the Guarantors and are secured by a pledge of all equity interests of certain subsidiaries as well as a lien on substantially all of the assets of Altisource Solutions S.à r.l. and the Guarantors, subject to certain exceptions.

The senior secured term loan agreement includes covenants that restrict or limit, among other things, our ability to: create liens and encumbrances; incur additional indebtedness; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases, dividends and repayment of junior indebtedness; change lines of business; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to our fiscal year and engage in mergers and consolidations.

The senior secured term loan agreement contains certain events of default, including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the senior secured term loan agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of covenants, (iv) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (v) default on any other debt that equals or exceeds $40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect. If any event of default occurs and is not cured within applicable grace periods set forth in the senior secured term loan agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of September 30, 2016, debt issuance costs were $4.8 million, net of $5.5 million of accumulated amortization. As of December 31, 2015, debt issuance costs were $6.2 million, net of $4.1 million of accumulated amortization.

Interest expense on the term loans totaled $18.5 million and $21.4 million for the nine months ended September 30, 2016 and 2015, respectively ($6.0 million and $7.0 million for the third quarter of 2016 and 2015, respectively).

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OTHER NON-CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2016

Other Liabilities Disclosure [Abstract]

OTHER NON-CURRENT LIABILITIES

OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Acquisition related obligations	$	3,191	$	8,422
Other non-current liabilities	10,599		9,731
Total	$	13,790	$	18,153

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FAIR VALUE

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

The following table presents the carrying amount and estimated fair value of financial instruments held by the Company as of September 30, 2016 and December 31, 2015. The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP are as follows:

	September 30, 2016								December 31, 2015
(in thousands)	Carrying amount		Fair value						Carrying amount		Fair value
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	134,948	$	134,948	$	—	$	—	$	179,327	$	179,327	$	—	$	—
Restricted cash	4,505		4,505		—		—		4,801		4,801		—		—
Available for sale securities	45,174		45,174		—		—		—		—		—		—
Liabilities:
Acquisition contingent consideration	2,757		—		—		2,757		3,932		—		—		3,932
Long-term debt	481,140		—		452,272		—		536,598		—		469,523		—

Fair Value Measurements on a Recurring Basis

Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair value due to the short-term nature of these instruments and were measured using Level 1 inputs.

Available for sale securities are carried at fair value and consist of 4.1 million shares of Residential common stock. Available for sale securities are measured using Level 1 inputs as these securities have quoted prices in active markets.

The fair value of our long-term debt is based on quoted market prices. Based on the frequency of trading, we do not believe that there is an active market for our debt. Therefore, the quoted prices are considered Level 2 inputs.

In accordance with ASC Topic 805, Business Combinations, liabilities for contingent consideration are reflected at fair value and adjusted each reporting period with the change in fair value recognized in earnings. Liabilities for acquisition related contingent consideration were recorded in connection with the acquisitions of certain assets and assumption of certain liabilities of Mortgage Builder Software, Inc. and Owners Advantage, LLC in 2014. We measure the liabilities for acquisition related contingent consideration using Level 3 inputs as they are determined based on the present value of future estimated payments, which include sensitivities pertaining to discount rates and financial projections.

During the nine months ended September 30, 2015, we reached an agreement with the former owners of Equator, LLC (“Equator”) to extinguish any liability for the Equator related contingent consideration (“Equator Earn Out”) in exchange for $0.5 million. In connection with this settlement, we reduced the liability for the Equator Earn Out to $0 and recognized a $7.6 million reduction in operating expenses in the condensed consolidated statements of operations and comprehensive income.

There were no transfers between different levels during the periods presented.

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Stock Repurchase Plan

On May 18, 2016, our shareholders approved a new share repurchase program, which replaced the previous share repurchase program. Under the new program, we are authorized to purchase up to 4.6 million shares of our common stock, based on a limit of 25% of the outstanding shares of common stock on the date of approval at a minimum price of $1.00 per share and a maximum price of $500.00 per share. This is in addition to amounts previously purchased under prior programs. Under the existing and prior programs, we purchased 1.3 million shares of common stock at an average price of $26.94 per share during the nine months ended September 30, 2016 and 1.8 million shares at an average price of $27.90 per share during the nine months ended September 30, 2015 (0.5 million shares at an average price of $28.68 per share for the third quarter of 2016 and 0.2 million shares at an average price of $26.88 per share for the third quarter of 2015). As of September 30, 2016, approximately 4.0 million shares of common stock remain available for repurchase under the new program. Our senior secured term loan limits the amount we can spend on share repurchases and may prevent repurchases in certain circumstances. As of September 30, 2016, approximately $379 million was available to repurchase our common stock under our senior secured term loan.

Share-Based Compensation

We issue share-based awards in the form of stock options and certain other equity-based awards for certain employees, officers and directors. We recorded share-based compensation expense of $4.7 million and $3.3 million for the nine months ended September 30, 2016 and 2015, respectively ($1.1 million and $1.9 million for the third quarter of 2016 and 2015, respectively). As of September 30, 2016, estimated unrecognized compensation costs related to share-based awards amounted to $7.3 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.23 years.

Stock Options

Stock option grants are composed of a combination of service-based, market-based and performance-based options.

Service-Based Options. These options generally vest over three or four years with equal annual cliff-vesting and expire on the earlier of ten years after the date of grant or following termination of service. A total of 0.9 million service-based awards were outstanding at September 30, 2016.

Market-Based Options. These option grants generally have two components, each of which vests only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. Market-based awards vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in annual installments. Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement. A total of 1.1 million market-based awards were outstanding at September 30, 2016.

Performance-Based Options. These option grants begin to vest upon the achievement of certain business unit specific financial measures. Generally, 25% of the awards vest upon the achievement of the performance criteria and the remaining 75% vest thereafter in three equal annual installments. The award of performance-based options is adjusted based on the level of achievement specified in the award agreements. If the performance criteria achieved is below a certain threshold, the award is cancelled. The options expire on the earlier of ten years after the date of grant or following termination of service. A total of 0.1 million performance-based awards were outstanding at September 30, 2016.

The Company granted 0.1 million stock options (at a weighted average exercise price of $29.22 per share) and 0.7 million stock options (at a weighted average exercise price of $23.19 per share) during the nine months ended September 30, 2016 and 2015, respectively.

The fair values of the service-based and performance-based options were determined using the Black-Scholes option pricing model and the fair value of the market-based options was determined using a lattice (binomial) model. The following assumptions were used to determine the fair value as of the grant date:

	Nine months ended  September 30, 2016		Nine months ended  September 30, 2015
	Black-Scholes	Binomial	Black-Scholes	Binomial
Risk-free interest rate (%)	1.25 - 1.89	0.23 - 1.97	1.50 - 1.78	0.02 - 2.26
Expected stock price volatility (%)	59.75 - 62.14	59.76 - 62.14	55.06 - 58.58	55.06 - 57.60
Expected dividend yield	—	—	—	—
Expected option life (in years)	6.00 - 6.25	4.54 - 4.88	6.00 - 6.25	4.10 - 4.88
Fair value	$11.15 - $18.60	$11.06 - $19.27	$10.01 - $17.34	$9.91 - $16.13

We determined the expected option life of all service-based stock option grants using the simplified method. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.

The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the period presented:

	Nine months ended September 30,
(in thousands, except per share amounts)	2016		2015
Weighted average grant date fair value of stock options granted per share	$	16.85	$	12.62
Intrinsic value of options exercised	17,280		232
Grant date fair value of stock options that vested	2,372		1,195

The following table summarizes the activity related to our stock options:

	Number of options		Weighted average exercise price		Weighted average contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2015	3,163,125		$	20.13	4.94	$	35,842
Granted	142,654		29.22
Exercised	(1,110,193	)	9.57
Forfeited	(115,539	)	36.53
Outstanding at September 30, 2016	2,080,047		$	25.48	5.55	$	22,595
Exercisable at September 30, 2016	1,274,537		$	20.17	3.62	$	18,372

Other Share-Based Awards

The Company’s other share-based and similar types of awards are composed of restricted shares and, through August 29, 2016, Equity Appreciation Rights (“EAR”). Effective August 29, 2016, the EAR plans were terminated.

The restricted shares are service-based awards that vest over one to four years with either annual cliff-vesting, vesting of all of the restricted shares at the end of the vesting period or vesting beginning after two years of service. The Company granted 13 thousand restricted shares (at a weighted average price of $26.66 per share) during the nine months ended September 30, 2016.

The following table summarizes the activity related to our restricted shares:

	Number of restricted shares
Outstanding at December 31, 2015	272,326
Granted	12,878
Issued	(18,774	)
Forfeited	(15,400	)
Outstanding at September 30, 2016	251,030

Share-based compensation expense for stock options and restricted shares is recorded net of estimated forfeiture rates ranging from 0% to 40%.

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REVENUE REVENUE

9 Months Ended

Sep. 30, 2016

Revenue [Abstract]

REVENUE

REVENUE

Revenue includes service revenue, reimbursable expenses and non-controlling interests. Service revenue consists of amounts attributable to our fee-based services. Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services, but we pass such costs directly on to our customers without any additional markup. Non-controlling interests represent the earnings of Lenders One and Wholesale One, consolidated entities not owned by Altisource, and are included in revenue and reduced from net income to arrive at net income attributable to Altisource (see Note 1). The components of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Service revenue	$	239,782	$	245,469	$	715,386	$	689,880
Reimbursable expenses	12,080		26,456		41,317		89,242
Non-controlling interests	883		851		1,973		2,457
Total	$	252,745	$	272,776	$	758,676	$	781,579

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COST OF REVENUE

9 Months Ended

Sep. 30, 2016

Cost of Revenue [Abstract]

COST OF REVENUE

COST OF REVENUE

Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles, fees paid to external providers related to the provision of services, reimbursable expenses, technology and telecommunications costs as well as depreciation and amortization of operating assets. The components of cost of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	66,357	$	62,997	$	201,193	$	197,213
Outside fees and services	77,445		66,952		222,574		175,021
Reimbursable expenses	12,080		26,456		41,317		89,242
Technology and telecommunications	11,502		10,630		32,145		32,878
Depreciation and amortization	6,618		6,815		20,007		20,481
Total	$	174,002	$	173,850	$	517,236	$	514,835

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

9 Months Ended

Sep. 30, 2016

Selling, General and Administrative Expense [Abstract]

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include payroll and employee benefits associated with personnel employed in executive, finance, law, compliance, human resources, vendor management, risk management, sales and marketing roles. This category also includes occupancy costs, professional fees, marketing costs, depreciation and amortization of non-operating assets and other expenses. The components of selling, general and administrative expenses were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	14,145	$	13,906	$	42,460	$	40,305
Occupancy related costs	8,903		9,808		26,785		30,509
Amortization of intangible assets	11,465		10,118		36,432		27,995
Professional services	4,097		4,008		17,533		18,637
Marketing costs	9,275		7,325		21,438		18,598
Depreciation and amortization	2,557		2,390		7,514		7,156
Other	3,444		3,783		9,547		12,110
Total	$	53,886	$	51,338	$	161,709	$	155,310

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LOSS ON HLSS EQUITY SECURITIES AND DIVIDENDS RECEIVED

9 Months Ended

Sep. 30, 2016

Other than Temporary Impairment Loss on Securities [Abstract]

LOSS ON HLSS EQUITY SECURITIES AND DIVIDENDS RECEIVED

LOSS ON HLSS EQUITY SECURITIES AND DIVIDENDS RECEIVED

During March 2015, we purchased 1.6 million shares of HLSS common stock in the open market for $30.0 million. This investment was classified as available for sale. On April 6, 2015, HLSS completed the sale of substantially all of its assets to New Residential Investment Corp. (“NRZ”) and adopted a plan of complete liquidation and dissolution. During April 2015, we received liquidating dividends and other dividends from HLSS totaling $20.4 million and we sold all of our 1.6 million shares of HLSS common stock in the open market for $7.7 million. As a result of these transactions, we recognized a net loss of $1.9 million for the nine months endedSeptember 30, 2015 (no comparative amounts in 2016) in connection with our investment in HLSS.

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OTHER INCOME (EXPENSE), NET

9 Months Ended

Sep. 30, 2016

Other Income and Expenses [Abstract]

OTHER INCOME (EXPENSE), NET

OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following:

	Three months ended  September 30,						Nine months ended  September 30,
(in thousands)	2016			2015			2016			2015
Gain on early extinguishment of debt	$	—		$	872		$	5,464		$	1,986
Expenses related to the purchase of available for sale securities	—			—			(3,356		)	—
Interest income	11			39			28			101
Other, net	(120		)	(258		)	472			(610		)
Total	$	(109	)	$	653		$	2,608		$	1,477

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities using the treasury stock method.

Basic and diluted EPS are calculated as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands, except per share data)	2016		2015		2016		2015
Net income attributable to Altisource	$	10,589	$	37,046	$	49,077	$	86,694
Weighted average common shares outstanding, basic	18,715		19,091		18,669		19,608
Dilutive effect of stock options and restricted shares	853		1,320		1,069		1,080
Weighted average common shares outstanding, diluted	19,568		20,411		19,738		20,688
Earnings per share:
Basic	$	0.57	$	1.94	$	2.63	$	4.42
Diluted	$	0.54	$	1.82	$	2.49	$	4.19

For the nine months ended September 30, 2016 and 2015, 0.4 million options and 0.6 million options, respectively, that were anti-dilutive have been excluded from the computation of diluted EPS (0.4 million options and 0.4 million options for the third quarter of 2016 and 2015, respectively). These options were anti-dilutive and excluded from the computation of diluted EPS because their exercise price was greater than the average market price of our common stock. Also excluded from the computation of diluted EPS are 0.4 million options and 0.3 million options for the nine months ended September 30, 2016 and 2015, respectively (0.4 million and 0.3 million options for the third quarter of 2016 and 2015, respectively), granted for shares that begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and an annualized rate of return to shareholders that have not yet been met.

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COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

Litigation

From time to time, we are involved in legal and administrative proceedings arising in the course of our business. We record a liability for these matters if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range.

On September 8, 2014, the West Palm Beach Firefighters’ Pension Fund filed a putative securities class action suit against Altisource Portfolio Solutions S.A. and certain of its current or former officers and directors in the United States District Court for the Southern District of Florida alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 with regard to disclosures concerning pricing and transactions with related parties that allegedly inflated Altisource Portfolio Solutions S.A. share prices. The Court subsequently appointed the Pension Fund for the International Union of Painters and Allied Trades District Council 35 and the Annuity Fund for the International Union of Painters and Allied Trades District Council 35 as Lead Plaintiffs. On January 30, 2015, Lead Plaintiffs filed an amended class action complaint which added Ocwen Financial Corporation as a defendant, and seeks a determination that the action may be maintained as a class action on behalf of purchasers of Altisource Portfolio Solutions S.A. securities between April 25, 2013 and December 21, 2014 and an unspecified amount of damages. Altisource Portfolio Solutions S.A. moved to dismiss the suit on March 23, 2015. On September 4, 2015, the Court granted the defendants’ motion to dismiss, finding that the Lead Plaintiffs’ amended complaint failed to state a claim as to any of the defendants, but permitting the Lead Plaintiffs to file another amended complaint. Lead Plaintiffs subsequently filed second and third amended complaints with substantially similar claims and theories. Altisource Portfolio Solutions S.A. moved to dismiss the third amended complaint on October 22, 2015. On December 22, 2015, the Court issued an order dismissing with prejudice all claims against Ocwen Financial Corporation and certain claims against Altisource Portfolio Solutions S.A. and the officer and director defendants, but denying the motion to dismiss as to other claims. Altisource Portfolio Solutions S.A. intends to continue to vigorously defend this suit.

On February 11, 2015, W.A. Sokolowski, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the United States District Court for the Southern District of Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duty by Ocwen Financial Corporation’s officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. Altisource Portfolio Solutions S.A. filed a motion to dismiss the complaint on November 9, 2015. While that motion was pending, additional lawsuits alleging similar claims for alleged breaches of fiduciary duties by current or former Ocwen Financial Corporation officers and directors were filed in or transferred to the Court. The Court subsequently consolidated these actions and denied Altisource Portfolio Solutions S.A.’s motion to dismiss the Sokolowski complaint without prejudice to re-file following appointment of lead counsel for the consolidated action and the filing or designation of an operative complaint. Lead counsel for plaintiffs filed their Consolidated Verified Shareholder Derivative Complaint (the “Consolidated Complaint”) on March 8, 2016. The Consolidated Complaint alleges claims that Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants aided and abetted alleged breaches of fiduciary duties by Ocwen Financial Corporation officers and directors and/or were unjustly enriched in connection with business dealings with Ocwen Financial Corporation. The Consolidated Complaint also seeks contribution from Altisource Portfolio Solutions S.A., its subsidiary Beltline Road Insurance Agency, Inc. and other defendants for amounts Ocwen Financial Corporation paid in connection with a settlement with the New York State Department of Financial Services. Altisource Portfolio Solutions S.A. and Beltline Road Insurance Agency, Inc. filed motions to dismiss the Consolidated Complaint on May 13, 2016 and intend to vigorously defend the lawsuit. The Court disclosed that the parties reached a settlement in a settlement conference on October 13, 2016. The Court docket provides that a Stipulation of Settlement is due on or before November 18, 2016, and a Final Approval Hearing will be held before the Court on January 18, 2017.

On March 26, 2015, Robert Moncavage, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against Ocwen Financial Corporation (as a nominal defendant), certain of its current or former officers and directors, Altisource Portfolio Solutions S.A. and other companies. The suit seeks recovery of an unspecified amount of damages for alleged breaches of fiduciary duties by the current or former Ocwen Financial Corporation officers and directors, which were allegedly aided and abetted by Altisource Portfolio Solutions S.A. and other defendants. On November 9, 2015, the Court entered an order staying all proceedings in the case pending further order of the Court. If the litigation proceeds, Altisource Portfolio Solutions S.A. intends to vigorously defend the lawsuit and to move to dismiss all claims against it.

Altisource is unable to predict the outcomes of these lawsuits or reasonably estimate the potential loss, if any, arising from the suits, given that the motion to dismiss in the second case has not been adjudicated, a stay has been entered in the third case and significant legal and factual issues remain to be determined in all three cases.

In addition to the matters referenced above, we are involved in legal actions in the course of our business, some of which seek monetary damages. We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows.

Regulatory Matters

Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority. We are currently responding to such inquiries from governmental authorities relating to certain aspects of our business. We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with these inquiries.

Ocwen Related Matters

Ocwen is our largest customer and 56% of our revenue for the nine months ended September 30, 2016 (56% of revenue for the third quarter of 2016) was from Ocwen. Additionally, 19% of our revenue for the nine months ended September 30, 2016 (19% of revenue for the third quarter of 2016) was earned on the portfolios serviced by Ocwen, when a party other than Ocwen selected Altisource as the service provider.

Ocwen has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, requests for information and other actions and is subject to pending legal proceedings that have or could result in adverse regulatory or other actions against Ocwen. While not all inclusive, regulatory actions to date have included subjecting Ocwen to independent oversight of its operations and placing certain restrictions on its ability to acquire servicing rights. Ocwen may become subject to future federal and state regulatory investigations, inquiries, requests for information and legal proceedings, any of which could also result in adverse regulatory or other actions against Ocwen.

As a result of the sale of substantially all of the assets of HLSS to NRZ in April of 2015, NRZ owned the rights to approximately 78% of Ocwen’s non-government-sponsored enterprise (“non-GSE”) servicing rights as of June 30, 2016. Under an agreement between NRZ and Ocwen, NRZ has the right (not necessarily the obligation or ability) to transfer servicing away from Ocwen if Ocwen does not maintain certain minimum servicer ratings on or after April 6, 2017.

Any or all of the foregoing may have significant adverse effects on Ocwen’s business and our continuing relationships with Ocwen. For example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services (including information technology and software services), it may be required to seek changes to its existing pricing structure with us, it may lose or sell some or all of its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing licenses. Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Ocwen’s business that could require it to sell assets or change its business operations. Any or all of these effects could result in our eventual loss of Ocwen as a customer or a reduction in the number and/or volume of services they purchase from us or the loss of other customers.

If any of the following events occurred, Altisource’s revenue would be significantly lower and our results of operations would be materially adversely affected, including from the possible impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable:

• Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us

• Ocwen loses or sells a significant portion or all of its non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

• Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio

• Altisource fails to be retained as a service provider

• The contractual relationship between Ocwen and Altisource changes significantly or there are significant changes to our pricing to Ocwen for services from which we generate material revenue

Management cannot predict the outcome of the above Ocwen related matters or the impact they may have on Altisource. However, in the event these Ocwen related matters materially negatively impact Altisource, we believe the impact to Altisource would occur over an extended period of time and the variable nature of our cost structure would allow us to realign our cost structure in line with remaining revenue.

In this regard, we have a plan that we believe would allow us to efficiently execute on this realignment. We believe that transfers of Ocwen’s servicing rights to a successor servicer(s) would take an extended period of time because of the approval required from many parties, including regulators, rating agencies, RMBS trustees, lenders and others. During this period of time, we believe we would continue to generate revenue from the services we provide to the transferred portfolio. Additionally, we have several strategic initiatives that focus on diversifying and growing our revenue and customer base. Our major strategic initiatives include growing our:

• Servicer Solutions business

• Origination Solutions business

• Consumer Real Estate Solutions business

• Real Estate Investor Solutions business

We have an established sales and marketing strategy to support each of these initiatives.

Management believes our plans, together with current liquidity and cash flows from operations will be sufficient to meet working capital, capital expenditures, debt service and other cash needs. However, there can be no assurance that our plans will be successful or our operations will be profitable.

Escrow and Trust Balances

We hold customers’ assets in escrow and trust accounts at various financial institutions pending completion of certain real estate activities. We also hold cash in trust accounts at various financial institutions where contractual obligations mandate maintaining dedicated bank accounts for our Financial Services segment’s collections. These amounts are held in escrow and trust accounts for limited periods of time and are not included in the condensed consolidated balance sheets. Amounts held in escrow and trust accounts were $65.6 million and $66.6 million at September 30, 2016 and December 31, 2015, respectively.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

Our business segments are based upon our organizational structure, which focuses primarily on the services offered, and are consistent with the internal reporting used by our Chief Executive Officer (our Chief Operating Decision Maker) to evaluate operating performance and to assess the allocation of our resources.

We classify our businesses into three reportable segments. The Mortgage Services segment provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies that span the mortgage and real estate lifecycle. The Financial Services segment provides collection and customer relationship management services primarily to debt originators and servicers (e.g., credit card, auto lending, retail credit and mortgage) and the utility, insurance and hotel industries. The Technology Services segmentprovides software and data analytics solutions that support the management of mortgage and real estate activities and marketplace transactions across the mortgage and real estate lifecycles and information technology infrastructure management services. In addition, Corporate Items and Eliminations include eliminations of transactions between the reportable segments, interest expense and costs related to corporate support functions including executive, finance, law, compliance, human resources, vendor management, risk management and sales and marketing costs not allocated to the business units. Intercompany transactions primarily consist of information technology infrastructure management services.

Financial information for our segments is as follows:

	Three months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	204,696	$	17,599	$	41,544		$	(11,094	)	$	252,745
Cost of revenue	132,399		13,238		38,557			(10,192		)	174,002
Gross profit (loss)	72,297		4,361		2,987			(902		)	78,743
Selling, general and administrative expenses	27,543		4,002		6,115			16,226			53,886
Income (loss) from operations	44,754		359		(3,128		)	(17,128		)	24,857
Total other income (expense), net	8		28		1			(6,098		)	(6,061		)
Income (loss) before income taxes and non-controlling interests	$	44,762	$	387	$	(3,127	)	$	(23,226	)	$	18,796

	Three months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	209,506	$	21,337	$	51,437		$	(9,504	)	$	272,776
Cost of revenue	122,724		15,418		44,419			(8,711		)	173,850
Gross profit (loss)	86,782		5,919		7,018			(793		)	98,926
Selling, general and administrative expenses	23,399		4,553		7,628			15,758			51,338
Income (loss) from operations	63,383		1,366		(610		)	(16,551		)	47,588
Total other income (expense), net	9		31		38			(6,466		)	(6,388		)
Income (loss) before income taxes and non-controlling interests	$	63,392	$	1,397	$	(572	)	$	(23,017	)	$	41,200

	Nine months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	612,243	$	57,461	$	120,291		$	(31,319	)	$	758,676
Cost of revenue	381,543		41,645		122,874			(28,826		)	517,236
Gross profit (loss)	230,700		15,816		(2,583		)	(2,493		)	241,440
Selling, general and administrative expenses	83,119		12,515		20,113			45,962			161,709
Income (loss) from operations	147,581		3,301		(22,696		)	(48,455		)	79,731
Total other income (expense), net	57		63		101			(16,094		)	(15,873		)
Income (loss) before income taxes and non-controlling interests	$	147,638	$	3,364	$	(22,595	)	$	(64,549	)	$	63,858

	Nine months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	583,873	$	67,080	$	159,399		$	(28,773	)	$	781,579
Cost of revenue	350,238		46,058		144,565			(26,026		)	514,835
Gross profit (loss)	233,635		21,022		14,834			(2,747		)	266,744
Selling, general and administrative expenses	69,188		13,856		22,189			50,077			155,310
Change in the fair value of Equator Earn Out	—		—		(7,591		)	—			(7,591		)
Income (loss) from operations	164,447		7,166		236			(52,824		)	119,025
Total other income (expense), net	28		21		21			(21,843		)	(21,773		)
Income (loss) before income taxes and non-controlling interests	$	164,475	$	7,187	$	257		$	(74,667	)	$	97,252

(in thousands)	Mortgage Services		Financial Services		Technology Services		Corporate Items and Eliminations		Consolidated Altisource
Total assets:
September 30, 2016	$	315,384	$	44,652	$	141,846	$	191,450	$	693,332
December 31, 2015	325,461		53,757		151,969		190,611		721,798

Our services are provided to customers primarily located in the United States. Premises and equipment, net consist of the following, by country:

(in thousands)	September 30, 2016		December 31, 2015
United States	$	76,683	$	85,021
India	15,705		21,187
Luxembourg	14,372		9,944
Philippines	2,776		2,664
Uruguay	249		305
Total	$	109,785	$	119,121

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ORGANIZATION AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting and Presentation

Basis of Accounting and Presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation.

Altisource consolidates two cooperative entities which are managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource: Best Partners Mortgage Cooperative, Inc., a mortgage cooperative doing business as Lenders One^® (“Lenders One”) and Best Partners Mortgage Brokers Cooperative, Inc., a mortgage cooperative doing business as Wholesale One^® (“Wholesale One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option) and to Wholesale One under a management agreement that ends on July 8, 2039 (with automatic renewals for three successive five-year periods).

The management agreements between MPA and Lenders One and between MPA and Wholesale One, pursuant to which MPA is the management company, represent variable interests in variable interest entities. MPA is the primary beneficiary of Lenders One and Wholesale One as it has the power to direct the activities that most significantly impact each of these cooperatives’ economic performance and the right to receive benefits from each of these cooperatives. As a result, Lenders One and Wholesale One are presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. As of September 30, 2016, Lenders One had total assets of $4.0 million and total liabilities of $1.9 million. As of December 31, 2015, Lenders One had total assets of $4.9 million and total liabilities of $3.7 million. As of September 30, 2016 and December 31, 2015, Wholesale One had less than $0.1 million in total assets and less than $0.1 million in total liabilities.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 15, 2016.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1 — Quoted prices in active markets for identical assets and liabilities

Level 2 — Observable inputs other than quoted prices included in Level 1

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Recently Adopted Accounting Pronouncement

Recently Adopted Accounting Pronouncement

On January 1, 2016, Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, became effective. As a result of this accounting change, the Company now presents debt issuance costs, net as a direct deduction from the related debt (see Note 12). Prior to January 1, 2016, debt issuance costs, net were included in other assets. We adopted the standard retrospectively. Accordingly, prior period amounts were reclassified to conform to the current presentation.

Future Adoption of New Accounting Pronouncements

Future Adoption of New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of this standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This standard will require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. It also amends certain financial statement presentation and disclosure requirements associated with the fair value of financial instruments. This standard will be effective for annual periods beginning after December 31, 2017, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard introduces a new lessee model that brings substantially all leases on the balance sheet. The standard will require companies to recognize lease assets and lease liabilities on their balance sheets and disclose key information about leasing arrangements in their financial statements. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard clarifies guidance on principal versus agent considerations in connection with revenue recognition. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard will require companies to recognize all award-related excess tax benefits and tax deficiencies in their income statements, classify any excess tax benefits as an operating activity in their statements of cash flows, provide companies with the option of estimating forfeitures or recognizing forfeitures as they occur, modify the statutory tax withholding requirements and classify cash paid by employers when directly withholding shares for tax withholding purposes as an investing activity in their statements of cash flows. This standard will be effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard provides guidance on identifying performance obligations in a contract with a customer and clarifying several licensing considerations, including whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time) and guidance on sales-based and usage-based royalties. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard addresses collectability, sales taxes and other similar taxes collected from customers, non-cash consideration, contract modifications at transition and completed contracts at transition. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted, although not prior to annual periods beginning after December 15, 2016. The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its statement of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.  This standard will require that companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs.  Current guidance prohibits companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party.  This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period.  Early adoption of this standard is permitted.  The Company is currently evaluating the impact this guidance may have on its results of operations and financial position.

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CUSTOMER CONCENTRATION (Tables)

9 Months Ended

Sep. 30, 2016

Ocwen

Concentration Risk

Schedule of related party revenue as a percentage of segment and consolidated revenue

Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Mortgage Services	59	%	64	%	59	%	63	%
Financial Services	16	%	16	%	17	%	20	%
Technology Services	41	%	51	%	41	%	52	%
Consolidated revenue	56	%	60	%	56	%	59	%

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2016

Granite

Acquisitions

Summary of allocation of purchase price

The preliminary allocation of the purchase price is as follows:

(in thousands)
Accounts receivable, net	$	1,103
Prepaid expenses	25
Other assets	25
Premises and equipment, net	299
Goodwill	8,449
	9,901
Accounts payable and accrued expenses	(111		)
Other current liabilities	(173		)
Purchase price	$	9,617

RentRange, Investability and Onit Solutions

Acquisitions

Summary of allocation of purchase price

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	3		$	—		$	3
Accounts receivable, net	245			(76		)	169
Premises and equipment, net	2,471			(1,067		)	1,404
Other assets	199			(196		)	3
Trademarks and trade names	1,205			—			1,205
Databases/other	910			1,035			1,945
Non-compete agreements	330			—			330
Customer relationships	255			—			255
Goodwill	19,565			50			19,615
	25,183			(254		)	24,929
Accounts payable and accrued expenses	(391		)	46			(345		)
Purchase price	$	24,792		$	(208	)	$	24,584

CastleLine

Acquisitions

Summary of allocation of purchase price

The initial and final allocation of the purchase price is as follows:

(in thousands)	Initial purchase price allocation			Adjustments			Final purchase price allocation
Cash	$	1,088		$	—		$	1,088
Accounts receivable, net	510			(410		)	100
Prepaid expenses	66			(46		)	20
Restricted cash	2,501			—			2,501
Non-compete agreements	1,105			25			1,130
Databases/other	465			1,335			1,800
Customer relationships	395			—			395
Trademarks and trade names	150			10			160
Deferred taxes	—			356			356
Goodwill	28,125			(1,395		)	26,730
	34,405			(125		)	34,280
Accounts payable and accrued expenses	(875		)	38			(837		)
Deferred revenue	(87		)	87			—
Purchase price	$	33,443		$	—		$	33,443

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ACCOUNTS RECEIVABLE, NET (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Billed	$	63,066		$	67,021
Unbilled	48,288			56,458
	111,354			123,479
Less: allowance for doubtful accounts	(9,774		)	(18,456		)
Total	$	101,580		$	105,023

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Maintenance agreements, current portion	$	7,213	$	7,000
Short-term investments in real estate	8,695		—
Income taxes receivable	3,132		633
Prepaid expenses	6,166		7,873
Other current assets	6,721		6,245
Total	$	31,927	$	21,751

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PREMISES AND EQUIPMENT, NET (Tables)

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of premises and equipment, net

Premises and equipment, net consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Computer hardware and software	$	163,140		$	177,010
Office equipment and other	19,586			21,720
Furniture and fixtures	13,792			14,443
Leasehold improvements	35,726			35,503
	232,244			248,676
Less: accumulated depreciation and amortization	(122,459		)	(129,555		)
Total	$	109,785		$	119,121

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GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of changes in goodwill

The following is a summary of goodwill by segment:

(in thousands)	Mortgage Services			Financial Services		Total
Balance as of December 31, 2015	$	80,423		$	2,378	$	82,801
Acquisition of CastleLine (1)	(1,395		)	—		(1,395		)
Acquisitions of RentRange and Investability (2)	50			—		50
Acquisition of Granite	8,449			—		8,449
Balance as of September 30, 2016	$	87,527		$	2,378	$	89,905

⁽¹⁾  During the second quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the CastleLine acquisition. See Note 4.

⁽²⁾  During the third quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the RentRange and Investability acquisition. See Note 4.

Schedule of intangible assets, net

Intangible assets, net consist of the following:

	Weighted average estimated useful life (in years)	Gross carrying amount				Accumulated amortization						Net book value
(in thousands)		September 30, 2016		December 31, 2015		September 30, 2016			December 31, 2015			September 30, 2016		December 31, 2015
Definite lived intangible assets:
Trademarks and trade names	13	$	15,254	$	15,244	$	(7,419	)	$	(6,491	)	$	7,835	$	8,753
Customer related intangible assets	10	274,428		274,428		(146,890		)	(113,725		)	127,538		160,703
Operating agreement	20	35,000		35,000		(11,667		)	(10,354		)	23,333		24,646
Non-compete agreements	4	1,460		1,435		(405		)	(115		)	1,055		1,320
Intellectual property	10	300		300		(78		)	(55		)	222		245
Other intangible assets	5	3,745		1,375		(752		)	(39		)	2,993		1,336
Total		$	330,187	$	327,782	$	(167,211	)	$	(130,779	)	$	162,976	$	197,003

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OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of other assets

Other assets consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Security deposits	$	5,599	$	5,341
Maintenance agreements, non-current portion	1,177		1,570
Restricted cash	4,505		4,801
Other	909		1,441
Total	$	12,190	$	13,153

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ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2016

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Accounts payable	$	16,940	$	11,644
Accrued expenses - general	34,148		30,347
Accrued salaries and benefits	46,417		46,564
Income taxes payable	3,856		3,316
Total	$	101,361	$	91,871

Schedule of other current liabilities

Other current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Unfunded cash account balances	$	2,995	$	6,395
Other	10,851		9,871
Total	$	13,846	$	16,266

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LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following:

(in thousands)	September 30, 2016			December 31, 2015
Senior secured term loan	$	481,140		$	536,598
Less: debt issuance costs, net	(4,778		)	(6,184		)
Less: unamortized discount, net	(1,728		)	(2,236		)
Net long-term debt	474,634			528,178
Less: current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	468,689		$	522,233

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OTHER NON-CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2016

Other Liabilities Disclosure [Abstract]

Schedule of other non current liabilities

Other non-current liabilities consist of the following:

(in thousands)	September 30, 2016		December 31, 2015
Acquisition related obligations	$	3,191	$	8,422
Other non-current liabilities	10,599		9,731
Total	$	13,790	$	18,153

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP are as follows:

	September 30, 2016								December 31, 2015
(in thousands)	Carrying amount		Fair value						Carrying amount		Fair value
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	134,948	$	134,948	$	—	$	—	$	179,327	$	179,327	$	—	$	—
Restricted cash	4,505		4,505		—		—		4,801		4,801		—		—
Available for sale securities	45,174		45,174		—		—		—		—		—		—
Liabilities:
Acquisition contingent consideration	2,757		—		—		2,757		3,932		—		—		3,932
Long-term debt	481,140		—		452,272		—		536,598		—		469,523		—

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of assumptions used to determine the fair value of options as of the grant date

The following assumptions were used to determine the fair value as of the grant date:

	Nine months ended  September 30, 2016		Nine months ended  September 30, 2015
	Black-Scholes	Binomial	Black-Scholes	Binomial
Risk-free interest rate (%)	1.25 - 1.89	0.23 - 1.97	1.50 - 1.78	0.02 - 2.26
Expected stock price volatility (%)	59.75 - 62.14	59.76 - 62.14	55.06 - 58.58	55.06 - 57.60
Expected dividend yield	—	—	—	—
Expected option life (in years)	6.00 - 6.25	4.54 - 4.88	6.00 - 6.25	4.10 - 4.88
Fair value	$11.15 - $18.60	$11.06 - $19.27	$10.01 - $17.34	$9.91 - $16.13

Summary of the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the fair value of options vested

The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the period presented:

	Nine months ended September 30,
(in thousands, except per share amounts)	2016		2015
Weighted average grant date fair value of stock options granted per share	$	16.85	$	12.62
Intrinsic value of options exercised	17,280		232
Grant date fair value of stock options that vested	2,372		1,195

Summary of the activity of the entity's stock options

The following table summarizes the activity related to our stock options:

	Number of options		Weighted average exercise price		Weighted average contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2015	3,163,125		$	20.13	4.94	$	35,842
Granted	142,654		29.22
Exercised	(1,110,193	)	9.57
Forfeited	(115,539	)	36.53
Outstanding at September 30, 2016	2,080,047		$	25.48	5.55	$	22,595
Exercisable at September 30, 2016	1,274,537		$	20.17	3.62	$	18,372

Schedule of share-based compensation, restricted stock and restricted stock units activity

The following table summarizes the activity related to our restricted shares:

	Number of restricted shares
Outstanding at December 31, 2015	272,326
Granted	12,878
Issued	(18,774	)
Forfeited	(15,400	)
Outstanding at September 30, 2016	251,030

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REVENUE REVENUE (Tables)

9 Months Ended

Sep. 30, 2016

Revenue [Abstract]

Schedule of revenue

The components of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Service revenue	$	239,782	$	245,469	$	715,386	$	689,880
Reimbursable expenses	12,080		26,456		41,317		89,242
Non-controlling interests	883		851		1,973		2,457
Total	$	252,745	$	272,776	$	758,676	$	781,579

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COST OF REVENUE (Tables)

9 Months Ended

Sep. 30, 2016

Cost of Revenue [Abstract]

Schedule of components of cost of revenue

The components of cost of revenue were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	66,357	$	62,997	$	201,193	$	197,213
Outside fees and services	77,445		66,952		222,574		175,021
Reimbursable expenses	12,080		26,456		41,317		89,242
Technology and telecommunications	11,502		10,630		32,145		32,878
Depreciation and amortization	6,618		6,815		20,007		20,481
Total	$	174,002	$	173,850	$	517,236	$	514,835

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables)

9 Months Ended

Sep. 30, 2016

Selling, General and Administrative Expense [Abstract]

Schedule of the components of selling, general and administrative expenses

The components of selling, general and administrative expenses were as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands)	2016		2015		2016		2015
Compensation and benefits	$	14,145	$	13,906	$	42,460	$	40,305
Occupancy related costs	8,903		9,808		26,785		30,509
Amortization of intangible assets	11,465		10,118		36,432		27,995
Professional services	4,097		4,008		17,533		18,637
Marketing costs	9,275		7,325		21,438		18,598
Depreciation and amortization	2,557		2,390		7,514		7,156
Other	3,444		3,783		9,547		12,110
Total	$	53,886	$	51,338	$	161,709	$	155,310

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OTHER INCOME (EXPENSE), NET (Tables)

9 Months Ended

Sep. 30, 2016

Other Income and Expenses [Abstract]

Schedule of other income (expense), net

Other income (expense), net consists of the following:

	Three months ended  September 30,						Nine months ended  September 30,
(in thousands)	2016			2015			2016			2015
Gain on early extinguishment of debt	$	—		$	872		$	5,464		$	1,986
Expenses related to the purchase of available for sale securities	—			—			(3,356		)	—
Interest income	11			39			28			101
Other, net	(120		)	(258		)	472			(610		)
Total	$	(109	)	$	653		$	2,608		$	1,477

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Schedule of basic and diluted EPS calculation

Basic and diluted EPS are calculated as follows:

	Three months ended  September 30,				Nine months ended  September 30,
(in thousands, except per share data)	2016		2015		2016		2015
Net income attributable to Altisource	$	10,589	$	37,046	$	49,077	$	86,694
Weighted average common shares outstanding, basic	18,715		19,091		18,669		19,608
Dilutive effect of stock options and restricted shares	853		1,320		1,069		1,080
Weighted average common shares outstanding, diluted	19,568		20,411		19,738		20,688
Earnings per share:
Basic	$	0.57	$	1.94	$	2.63	$	4.42
Diluted	$	0.54	$	1.82	$	2.49	$	4.19

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Schedule of financial information of segments

Financial information for our segments is as follows:

	Three months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	204,696	$	17,599	$	41,544		$	(11,094	)	$	252,745
Cost of revenue	132,399		13,238		38,557			(10,192		)	174,002
Gross profit (loss)	72,297		4,361		2,987			(902		)	78,743
Selling, general and administrative expenses	27,543		4,002		6,115			16,226			53,886
Income (loss) from operations	44,754		359		(3,128		)	(17,128		)	24,857
Total other income (expense), net	8		28		1			(6,098		)	(6,061		)
Income (loss) before income taxes and non-controlling interests	$	44,762	$	387	$	(3,127	)	$	(23,226	)	$	18,796

	Three months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	209,506	$	21,337	$	51,437		$	(9,504	)	$	272,776
Cost of revenue	122,724		15,418		44,419			(8,711		)	173,850
Gross profit (loss)	86,782		5,919		7,018			(793		)	98,926
Selling, general and administrative expenses	23,399		4,553		7,628			15,758			51,338
Income (loss) from operations	63,383		1,366		(610		)	(16,551		)	47,588
Total other income (expense), net	9		31		38			(6,466		)	(6,388		)
Income (loss) before income taxes and non-controlling interests	$	63,392	$	1,397	$	(572	)	$	(23,017	)	$	41,200

	Nine months ended September 30, 2016
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	612,243	$	57,461	$	120,291		$	(31,319	)	$	758,676
Cost of revenue	381,543		41,645		122,874			(28,826		)	517,236
Gross profit (loss)	230,700		15,816		(2,583		)	(2,493		)	241,440
Selling, general and administrative expenses	83,119		12,515		20,113			45,962			161,709
Income (loss) from operations	147,581		3,301		(22,696		)	(48,455		)	79,731
Total other income (expense), net	57		63		101			(16,094		)	(15,873		)
Income (loss) before income taxes and non-controlling interests	$	147,638	$	3,364	$	(22,595	)	$	(64,549	)	$	63,858

	Nine months ended September 30, 2015
(in thousands)	Mortgage Services		Financial Services		Technology Services			Corporate Items and Eliminations			Consolidated Altisource
Revenue	$	583,873	$	67,080	$	159,399		$	(28,773	)	$	781,579
Cost of revenue	350,238		46,058		144,565			(26,026		)	514,835
Gross profit (loss)	233,635		21,022		14,834			(2,747		)	266,744
Selling, general and administrative expenses	69,188		13,856		22,189			50,077			155,310
Change in the fair value of Equator Earn Out	—		—		(7,591		)	—			(7,591		)
Income (loss) from operations	164,447		7,166		236			(52,824		)	119,025
Total other income (expense), net	28		21		21			(21,843		)	(21,773		)
Income (loss) before income taxes and non-controlling interests	$	164,475	$	7,187	$	257		$	(74,667	)	$	97,252

(in thousands)	Mortgage Services		Financial Services		Technology Services		Corporate Items and Eliminations		Consolidated Altisource
Total assets:
September 30, 2016	$	315,384	$	44,652	$	141,846	$	191,450	$	693,332
December 31, 2015	325,461		53,757		151,969		190,611		721,798

Schedule of premises and equipment, net by country

Premises and equipment, net consist of the following, by country:

(in thousands)	September 30, 2016		December 31, 2015
United States	$	76,683	$	85,021
India	15,705		21,187
Luxembourg	14,372		9,944
Philippines	2,776		2,664
Uruguay	249		305
Total	$	109,785	$	119,121

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ORGANIZATION AND BASIS OF PRESENTATION (Details) $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($) segment	Dec. 31, 2015 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reporting segments | segment	3
Lenders One [Member]
Summary of significant accounting policies
Total assets	$ 4.0	$ 4.9
Total liabilities	1.9	3.7
Wholesale One [Member]
Summary of significant accounting policies
Total assets	0.1	0.1
Total liabilities	$ 0.1	$ 0.1

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CUSTOMER CONCENTRATION (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Concentration Risk
Other portfolio servicing revenue	$ 48.0	$ 56.7	$ 146.0	$ 164.7
Ocwen
Concentration Risk
Fair value, accounts receivable	$ 32.6		$ 32.6		$ 38.2
Ocwen | Revenue from Rights Concentration Risk | Sales Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	56.00%	60.00%	56.00%	59.00%
Billed Revenues | Ocwen
Concentration Risk
Fair value, accounts receivable	$ 21.8		$ 21.8		20.4
Unbilled Revenues | Ocwen
Concentration Risk
Fair value, accounts receivable	$ 10.8		$ 10.8		$ 17.8
Mortgage Services | Ocwen | Revenue from Rights Concentration Risk | Sales Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	59.00%	64.00%	59.00%	63.00%
Financial Services | Ocwen | Revenue from Rights Concentration Risk | Sales Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	16.00%	16.00%	17.00%	20.00%
Revenue from largest customer	$ 141.6	$ 163.8	$ 422.2	$ 464.8
Technology Services | Ocwen | Revenue from Rights Concentration Risk | Sales Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	41.00%	51.00%	41.00%	52.00%

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TRANSACTIONS WITH RELATED PARTIES (Details) $ in Millions	1 Months Ended
	Jan. 16, 2015 USD ($)
Ocwen
Related Party Transaction [Line Items]
Related party, revenue earned	$ 22.9
Ocwen | Data Access and Services Agreement
Related Party Transaction [Line Items]
Related party, cost of revenue	1.9
Ocwen | Support Services Agreement
Related Party Transaction [Line Items]
Related party, selling, general and administrative expenses billed to related party	0.1
Related party, selling, general and administrative expenses billed by related party	0.3
Residential | Management, Support and Other Services Agreements
Related Party Transaction [Line Items]
Related party, revenue earned	$ 1.0

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ACQUISITIONS ACQUISITIONS - Granite (Details) - USD ($) $ in Thousands	Jul. 29, 2016	Sep. 30, 2016	Dec. 31, 2015
Acquisitions
Goodwill		$ 89,905	$ 82,801
Granite
Acquisitions
Business combination, consideration transferred	$ 9,600
Accounts receivable, net	1,103
Prepaid expenses	25
Other assets	25
Premises and equipment, net	299
Goodwill	8,449
Total assets	9,901
Accounts payable and accrued expenses	(111)
Other current liabilities	(173)
Purchase price	$ 9,617

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ACQUISITIONS - RentRange, Investability and Onit Solutions (Details) - USD ($) shares in Thousands, $ in Thousands		9 Months Ended
	Oct. 09, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Acquisitions
Acquisition of businesses with restricted shares		$ 0	$ 14,427
Goodwill		89,905		$ 82,801
RentRange, Investability and Onit Solutions
Acquisitions
Business combination, consideration transferred	$ 24,800
Cash payment to acquire business	$ 17,500
Number of shares exchanged for acquisition (in thousands)	247
Acquisition of businesses with restricted shares	$ 7,300
Contingent consideration arrangements, payment period	4 years
Cash		3
Accounts receivable, net		169
Premises and equipment, net		1,404
Other assets		3
Trademarks and trade names		1,205
Databases/other		1,945
Non-compete agreements		330
Customer relationships		255
Goodwill		19,615
Total assets		24,929
Accounts payable and accrued expenses		(345)
Purchase price		24,584
Initial purchase price allocation | RentRange, Investability and Onit Solutions
Acquisitions
Cash	$ 3
Accounts receivable, net	245
Premises and equipment, net	2,471
Other assets	199
Trademarks and trade names	1,205
Databases/other	910
Non-compete agreements	330
Customer relationships	255
Goodwill	19,565
Total assets	25,183
Accounts payable and accrued expenses	(391)
Purchase price	$ 24,792
Adjustments | RentRange, Investability and Onit Solutions
Acquisitions
Cash		0
Accounts receivable, net		(76)
Premises and equipment, net		(1,067)
Other assets		(196)
Trademarks and trade names		0
Databases/other		1,035
Non-compete agreements		0
Customer relationships		0
Goodwill		50
Total assets		(254)
Accounts payable and accrued expenses		46
Purchase price		$ (208)

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ACQUISITIONS - CastleLine (Details) - USD ($) shares in Thousands, $ in Thousands		9 Months Ended
	Jul. 17, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Acquisitions
Acquisition of businesses with restricted shares		$ 0	$ 14,427
Goodwill		$ 89,905			$ 82,801
CastleLine
Acquisitions
Cash paid at acquisition	$ 12,300
Accounts payable	$ 10,500
Contingent consideration arrangements, payment period	4 years
Number of shares exchanged for acquisition (in thousands)	495
Acquisition of businesses with restricted shares	$ 14,400
Contingent consideration arrangements, range of outcomes, value, high	3,800
Cash				$ 1,088
Accounts receivable, net				100
Prepaid expenses				20
Restricted cash				2,501
Non-compete agreements				1,130
Databases/other				1,800
Customer relationships				395
Trademarks and trade names				160
Deferred taxes				356
Goodwill				26,730
Total assets				34,280
Accounts payable and accrued expenses				(837)
Deferred revenue				0
Purchase price				33,443
CastleLine | Initial purchase price allocation
Acquisitions
Business combination, consideration transferred	33,400
Cash	1,088
Accounts receivable, net	510
Prepaid expenses	66
Restricted cash	2,501
Non-compete agreements	1,105
Databases/other	465
Customer relationships	395
Trademarks and trade names	150
Deferred taxes	0
Goodwill	28,125
Total assets	34,405
Accounts payable and accrued expenses	(875)
Deferred revenue	(87)
Purchase price	$ 33,443
CastleLine | Adjustments
Acquisitions
Cash				0
Accounts receivable, net				(410)
Prepaid expenses				(46)
Restricted cash				0
Non-compete agreements				25
Databases/other				1,335
Customer relationships				0
Trademarks and trade names				10
Deferred taxes				356
Goodwill				(1,395)
Total assets				(125)
Accounts payable and accrued expenses				38
Deferred revenue				87
Purchase price				$ 0

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AVAILABLE FOR SALE SECURITIES (Details) - USD ($) shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Number of available for sale shares acquired (in shares)		4.1
Purchase of available for sale securities	$ 0	$ 48,219,000	$ 29,966,000
Available for sale securities	$ 45,174,000	45,174,000		$ 0
Available for sale securities, investment related expenses		3,400,000
Investment income, dividend		$ 1,000,000

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ACCOUNTS RECEIVABLE, NET (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts receivable, net
Accounts receivable, gross	$ 111,354	$ 123,479
Less: allowance for doubtful accounts	(9,774)	(18,456)
Total	101,580	105,023
Billed
Accounts receivable, net
Accounts receivable, gross	63,066	67,021
Unbilled Revenues
Accounts receivable, net
Accounts receivable, gross	$ 48,288	$ 56,458

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Maintenance agreements, current portion	$ 7,213	$ 7,000
Short-term investments in real estate	8,695	0
Income taxes receivable	3,132	633
Prepaid expenses	6,166	7,873
Other current assets	6,721	6,245
Total	$ 31,927	$ 21,751

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PREMISES AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	$ 232,244		$ 232,244		$ 248,676
Less: accumulated depreciation and amortization	(122,459)		(122,459)		(129,555)
Total	109,785		109,785		119,121
Depreciation and amortization	9,200	$ 9,200	27,521	$ 27,637
Computer hardware and software
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	163,140		163,140		177,010
Office equipment and other
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	19,586		19,586		21,720
Furniture and fixtures
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	13,792		13,792		14,443
Leasehold improvements
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	$ 35,726		$ 35,726		$ 35,503

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GOODWILL (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Goodwill [Roll Forward]
Goodwill, beginnig of period	$ 82,801
Goodwill, end of period	89,905
Mortgage Services
Goodwill [Roll Forward]
Goodwill, beginnig of period	80,423
Goodwill, end of period	87,527
Financial Services
Goodwill [Roll Forward]
Goodwill, beginnig of period	2,378
Goodwill, end of period	2,378
CastleLine | Mortgage Services
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	(1,395)
CastleLine | Financial Services
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	0
RentRange, Investability and Onit Solutions
Goodwill [Roll Forward]
Goodwill, end of period	19,615
RentRange, Investability and Onit Solutions | Mortgage Services
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	50
RentRange, Investability and Onit Solutions | Financial Services
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	0
Granite
Goodwill [Roll Forward]
Acquisition of Granite	8,449
Granite | Mortgage Services
Goodwill [Roll Forward]
Acquisition of Granite	8,449
Granite | Financial Services
Goodwill [Roll Forward]
Acquisition of Granite	0
Scenario, Adjustment [Member] | CastleLine
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	(1,395)
Scenario, Adjustment [Member] | RentRange, Investability and Onit Solutions
Goodwill [Roll Forward]
Goodwill, purchase price allocation adjustment	50
Goodwill, end of period	$ 50

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INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Intangible Assets, Net
Gross carrying amount	$ 330,187		$ 330,187		$ 327,782
Accumulated amortization	(167,211)		(167,211)		(130,779)
Net book value	162,976		162,976		197,003
Amortization expense for definite lived intangible assets	11,465	$ 10,118	36,432	$ 27,995
2016	47,700		47,700
2017	34,600		34,600
2018	26,100		26,100
2019	20,700		20,700
2020	16,800		16,800
Trademarks and trade names
Intangible Assets, Net
Gross carrying amount	15,254		15,254		15,244
Accumulated amortization	(7,419)		(7,419)		(6,491)
Net book value	7,835		7,835		8,753
Customer related intangible assets
Intangible Assets, Net
Gross carrying amount	274,428		274,428		274,428
Accumulated amortization	(146,890)		(146,890)		(113,725)
Net book value	127,538		127,538		160,703
Operating agreement
Intangible Assets, Net
Gross carrying amount	35,000		35,000		35,000
Accumulated amortization	(11,667)		(11,667)		(10,354)
Net book value	23,333		23,333		24,646
Non-compete agreements
Intangible Assets, Net
Gross carrying amount	1,460		1,460		1,435
Accumulated amortization	(405)		(405)		(115)
Net book value	1,055		1,055		1,320
Intellectual property
Intangible Assets, Net
Gross carrying amount	300		300		300
Accumulated amortization	(78)		(78)		(55)
Net book value	222		222		245
Other intangible assets
Intangible Assets, Net
Gross carrying amount	3,745		3,745		1,375
Accumulated amortization	(752)		(752)		(39)
Net book value	$ 2,993		$ 2,993		$ 1,336
Weighted Average [Member] | Trademarks and trade names
Intangible Assets, Net
Weighted average estimated useful life (in years)			13 years
Weighted Average [Member] | Customer related intangible assets
Intangible Assets, Net
Weighted average estimated useful life (in years)			10 years
Weighted Average [Member] | Operating agreement
Intangible Assets, Net
Weighted average estimated useful life (in years)			20 years
Weighted Average [Member] | Non-compete agreements
Intangible Assets, Net
Weighted average estimated useful life (in years)			4 years
Weighted Average [Member] | Intellectual property
Intangible Assets, Net
Weighted average estimated useful life (in years)			10 years
Weighted Average [Member] | Other intangible assets
Intangible Assets, Net
Weighted average estimated useful life (in years)			5 years

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OTHER ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Security deposits	$ 5,599	$ 5,341
Maintenance agreements, non-current portion	1,177	1,570
Restricted cash	4,505	4,801
Other	909	1,441
Total	$ 12,190	$ 13,153

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accounts payable	$ 16,940	$ 11,644
Accrued expenses - general	34,148	30,347
Accrued salaries and benefits	46,417	46,564
Income taxes payable	3,856	3,316
Total	$ 101,361	$ 91,871

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OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Other current liabilities
Unfunded cash account balances	$ 2,995	$ 6,395
Other	10,851	9,871
Total	$ 13,846	$ 16,266

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LONG-TERM DEBT (Details)		3 Months Ended		9 Months Ended
	Aug. 01, 2014 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	May 07, 2013 USD ($)
Debt
Senior secured term loan		$ 481,140,000		$ 481,140,000		$ 536,598,000
Less: debt issuance costs, net		(4,778,000)		(4,778,000)		(6,184,000)
Less: unamortized discount, net		(1,728,000)		(1,728,000)		(2,236,000)
Net long-term debt		474,634,000		474,634,000		528,178,000
Less: current portion		(5,945,000)		(5,945,000)		(5,945,000)
Long-term debt, less current portion		468,689,000		$ 468,689,000		522,233,000
Percentage discount of par received on early extinguishment of debt				13.20%	9.80%
Gains (losses) on extinguishment of debt			$ 872,000	$ 5,464,000	$ 1,986,000
Interest on long-term debt		5,952,000	7,041,000	18,481,000	21,396,000
Senior secured term loan
Debt
Less: debt issuance costs, net		$ (4,800,000)		(4,800,000)		(6,200,000)
Debt instrument accordion feature increase in additional borrowings							$ 200,000,000.0
Aggregate amount of each consecutive quarterly scheduled principal installment	$ 1,486,000
Mandatory prepayments owed				0
Extinguishment of debt, amount			$ 11,000,000	51,000,000	27,000,000
Percentage discount of par received on early extinguishment of debt			11.00%
Gains (losses) on extinguishment of debt			$ 900,000	$ 5,500,000	2,000,000
Interest rate at the end of the period (as a percent)		4.50%		4.50%
Accumulated amortization		$ 5,500,000		$ 5,500,000		$ 4,100,000
Interest on long-term debt		$ 6,000,000	$ 7,000,000	$ 18,500,000	$ 21,400,000
Senior secured term loan | Maximum
Debt
Leverage ratio to be maintained under the credit facility covenants				3.0
Covenant threshold, leverage ratio				3.50
Number of days within which the entity fails to pay principal when due or interest or any other amount owing on any other obligation under the credit agreement, is considered as event of default				5 days
Amount of principal or interest if failed to pay considered as event of default				$ 40,000,000
Amount of debt which results in acceleration of debt if failed to pay considered as event of default				40,000,000
Amount of unbonded, undischarged or unstayed debt under entry by court of one or more judgments for certain period to determine as event of default				$ 40,000,000
Senior secured term loan | Minimum
Debt
Leverage ratio to be maintained under the credit facility covenants				1.00
Covenant threshold, leverage ratio				1.00
Senior secured term loan | Adjusted Eurodollar Rate
Debt
Reference rate				Adjusted Eurodollar Rate
Fixed interest rate base (as a percent)				1.00%
Interest rate margin (as a percent)				3.50%
Senior secured term loan | Base Rate
Debt
Reference rate				Base Rate
Fixed interest rate base (as a percent)				2.00%
Interest rate margin (as a percent)				2.50%

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OTHER NON-CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Other Liabilities Disclosure [Abstract]
Acquisition related obligations	$ 3,191	$ 8,422
Other non-current liabilities	10,599	9,731
Total	$ 13,790	$ 18,153

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FAIR VALUE (Details) - USD ($) shares in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Available for sale securities	$ 45,174,000		$ 45,174,000		$ 0
Fair value of acquisition related contingent consideration	2,757,000		2,757,000		3,932,000
Change in the fair value of Equator Earn Out	$ 0	$ 0	$ 0	$ (7,591,000)
Equator LLC
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Payment made to extinguish contingent consideration				$ 500,000
Value of contingent consideration after payment to sellers					$ 0
Residential
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Available-for-sale securities, number of shares	4.1		4.1

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FAIR VALUE (Details 2) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure
Cash and cash equivalents	$ 134,948,000	$ 179,327,000	$ 150,147,000	$ 161,361,000
Restricted cash	4,505,000	4,801,000
Available for sale securities	45,174,000	0
Liabilities, Fair Value Disclosure
Acquisition contingent consideration	2,757,000	3,932,000
Long-term debt, carrying amount	481,140,000	536,598,000
Level 1 | Fair Value, Measurements, Recurring
Assets, Fair Value Disclosure
Cash and cash equivalents	134,948,000	179,327,000
Restricted cash	4,505,000	4,801,000
Available for sale securities	45,174,000	0
Liabilities, Fair Value Disclosure
Acquisition contingent consideration	0	0
Long-term debt, fair value	0	0
Level 2 | Fair Value, Measurements, Recurring
Assets, Fair Value Disclosure
Cash and cash equivalents	0	0
Restricted cash	0	0
Available for sale securities	0	0
Liabilities, Fair Value Disclosure
Acquisition contingent consideration	0	0
Long-term debt, fair value	452,272,000	469,523,000
Level 3 | Fair Value, Measurements, Recurring
Assets, Fair Value Disclosure
Cash and cash equivalents	0	0
Restricted cash	0	0
Available for sale securities	0	0
Liabilities, Fair Value Disclosure
Acquisition contingent consideration	2,757,000	3,932,000
Long-term debt, fair value	$ 0	$ 0

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Stock Repurchase Plan & Share-Based Compensation (Details) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	May 18, 2016 $ / shares shares	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) component $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Dec. 31, 2015 shares
Stock Repurchase Plan
Capacity available to repurchase common stock under senior secured term loan (in dollars) | $		$ 379,000		$ 379,000
Share-Based Compensation
Share-based compensation expense (in dollars) | $		1,100	$ 1,900	4,700	$ 3,300
Estimated unrecognized compensation costs (in dollars) | $		$ 7,300		$ 7,300
Weighted average remaining requisite service period for stock options over which unrecognized compensation costs would be recognized				2 years 2 months 23 days
Weighted average fair value of stock options granted and total intrinsic value of stock options exercised
Weighted average grant date fair value of stock options granted per share | $ / shares				$ 16.85	$ 12.62
Intrinsic value of options exercised | $				$ 17,280	$ 232
Grant date fair value of stock options that vested | $				$ 2,372	$ 1,195
Minimum
Share-Based Compensation
Share-based compensation arrangement by share-based payment award, award vesting period				1 year
Maximum
Share-Based Compensation
Share-based compensation arrangement by share-based payment award, award vesting period				4 years
Employee and Non Employee Stock Option | Service-Based
Share-Based Compensation
Outstanding (in shares)		900,000		900,000
Employee and Non Employee Stock Option | Service-Based | Minimum
Share-Based Compensation
Share-based compensation arrangement by share-based payment award, award vesting period				3 years
Employee and Non Employee Stock Option | Service-Based | Maximum
Share-Based Compensation
Share-based compensation arrangement by share-based payment award, award vesting period				4 years
Expiration term				10 years
Employee and Non Employee Stock Option | Market-Based
Share-Based Compensation
Expiration term				10 years
Outstanding (in shares)		1,100,000		1,100,000
Allowable performance period before expiration date				3 years
Number of components of an award | component				2
Employee and Non Employee Stock Option | Market-Based, ordinary performance | Minimum
Share-Based Compensation
Percentage of compounded annual gain of stock price over exercise price required for the award to vest				20.00%
Employee and Non Employee Stock Option | Market-Based, extraordinary performance | Minimum
Share-Based Compensation
Percentage of compounded annual gain of stock price over exercise price required for the award to vest				25.00%
Employee and Non Employee Stock Option | Performance-Based
Share-Based Compensation
Outstanding (in shares)		100,000		100,000
Vesting percentage for awards that vest upon achievement of certain criteria				25.00%
Cumulative vesting percentage for awards that vest in equal annual installments				75.00%
Employee and Non Employee Stock Option | Performance-Based | Minimum
Share-Based Compensation
Share-based compensation arrangement by share-based payment award, award vesting period				10 years
Option
Share-Based Compensation
Outstanding (in shares)		2,080,047		2,080,047		3,163,125
Stock options granted (in shares)				142,654	729,900.0
Weighted average exercise price of stock options granted (in usd per share) | $ / shares				$ 29.22	$ 23.19
Share Repurchase Program, Current
Stock Repurchase Plan
Number of shares of common stock authorized to be purchased (in shares)	4,600,000.0
Percentage of outstanding shares authorized to be repurchased	25.00%
Minimum purchase price authorized (in usd per share) | $ / shares	$ 1.00
Maximum purchase price authorized (in usd per share) | $ / shares	$ 500.00
Remaining number of shares available for repurchase under the plan (in shares)		4,000,000		4,000,000
Share Repurchase Programs
Stock Repurchase Plan
Number of shares of common stock purchased (in shares)		500,000	200,000	1,300,000	1,800,000
Average purchase price per share (in usd per share) | $ / shares		$ 28.68	$ 26.88	$ 26.94	$ 27.90

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Black-Scholes and Binomial model Assumptions and Summary of Activity related to our stock (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Option
Summary of activity related to our stock
Outstanding at the beginning of the period (in shares)	3,163,125
Stock options granted (in shares)	142,654	729,900.0
Exercised (in shares)	(1,110,193)
Forfeited (in shares)	(115,539)
Outstanding at the end of the period (in shares)	2,080,047		3,163,125
Exercisable at the end of the period (in shares)	1,274,537
Weighted average exercise price
Outstanding at the beginning of the period (in usd per share)	$ 20.13
Weighted average exercise price of stock options granted (in usd per share)	29.22	$ 23.19
Exercised (in usd per share)	9.57
Forfeited (in usd per share)	36.53
Outstanding at the end of the period (in usd per share)	25.48		$ 20.13
Exercisable at the end of the period (in usd per share)	$ 20.17
Weighted average contractual term
Weighted average contractual term	5 years 6 months 18 days		4 years 11 months 9 days
Exercisable at the end of the period	3 years 7 months 13 days
Aggregate intrinsic value
Aggregate intrinsic value, beginning balance (in dollars)	$ 35,842
Aggregate intrinsic value, ending balance (in dollars)	22,595		$ 35,842
Exercisable at the end of the period (in dollars)	$ 18,372
Black Scholes | Minimum
Aggregate intrinsic value
Risk-free interest rate (%)	1.25%	1.50%
Expected stock price volatility (%)	59.75%	55.06%
Expected option life (in years)	6 years	6 years
Fair value	$ 11.15	$ 10.01
Black Scholes | Maximum
Aggregate intrinsic value
Risk-free interest rate (%)	1.89%	1.78%
Expected stock price volatility (%)	62.14%	58.58%
Expected option life (in years)	6 years 3 months	6 years 3 months
Fair value	$ 18.60	$ 17.34
Binomial | Minimum
Aggregate intrinsic value
Risk-free interest rate (%)	0.23%	0.02%
Expected stock price volatility (%)	59.76%	55.06%
Expected option life (in years)	4 years 6 months 15 days	4 years 1 month 6 days
Fair value	$ 11.06	$ 9.91
Binomial | Maximum
Aggregate intrinsic value
Risk-free interest rate (%)	1.97%	2.26%
Expected stock price volatility (%)	62.14%	57.60%
Expected option life (in years)	4 years 10 months 17 days	4 years 10 months 17 days
Fair value	$ 19.27	$ 16.13

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION RSU (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items]
Weighted average price per share of restricted shares granted | $ / shares	$ 26.66
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number of RSU outstanding, beginning of period	272,326
RSU Granted	12,878
RSU Issued	(18,774)
RSU Forfeited	15,400
Number of RSU outstanding, end of period	251,030
Minimum
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Share based compensation arrangement by share based payment award estimated forfeiture rate	0.00%
Minimum | Restricted Stock Units (RSUs)
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	1 year
Maximum
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Share based compensation arrangement by share based payment award estimated forfeiture rate	40.00%
Maximum | Restricted Stock Units (RSUs)
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period	4 years

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REVENUE Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule of revenue [Line Items]
Revenue	$ 252,745	$ 272,776	$ 758,676	$ 781,579
Service revenue
Schedule of revenue [Line Items]
Revenue	239,782	245,469	715,386	689,880
Reimbursable expenses
Schedule of revenue [Line Items]
Revenue	12,080	26,456	41,317	89,242
Non-controlling interests
Schedule of revenue [Line Items]
Revenue	$ 883	$ 851	$ 1,973	$ 2,457

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COST OF REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Cost of Revenue [Abstract]
Compensation and benefits	$ 66,357	$ 62,997	$ 201,193	$ 197,213
Outside fees and services	77,445	66,952	222,574	175,021
Reimbursable expenses	12,080	26,456	41,317	89,242
Technology and telecommunications	11,502	10,630	32,145	32,878
Depreciation and amortization	6,618	6,815	20,007	20,481
Total	$ 174,002	$ 173,850	$ 517,236	$ 514,835

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Selling, General and Administrative Expense [Abstract]
Compensation and benefits	$ 14,145	$ 13,906	$ 42,460	$ 40,305
Occupancy related costs	8,903	9,808	26,785	30,509
Amortization of intangible assets	11,465	10,118	36,432	27,995
Professional services	4,097	4,008	17,533	18,637
Marketing costs	9,275	7,325	21,438	18,598
Depreciation and amortization	2,557	2,390	7,514	7,156
Other	3,444	3,783	9,547	12,110
Total	$ 53,886	$ 51,338	$ 161,709	$ 155,310

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LOSS ON HLSS EQUITY SECURITIES AND DIVIDENDS RECEIVED (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 17, 2015	Apr. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale shares acquired (in shares)					4,100,000
Purchase of available for sale securities			$ 0		$ 48,219,000	$ 29,966,000
Loss on HLSS equity securities and dividends received, net			$ 0	$ 0	0	(1,854,000)
HLSS
Schedule of Available-for-sale Securities [Line Items]
Liquidating dividend		$ 20,400,000
Sale proceeds from HLSS common stock		$ 7,700,000
Loss on HLSS equity securities and dividends received, net					$ 0	$ (1,900,000)
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Common stock | HLSS
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale shares acquired (in shares)	1,613,125
Available-for-sale securities, shares sold		1,600,000

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OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other Income and Expenses [Abstract]
Gain on early extinguishment of debt		$ 872	$ 5,464	$ 1,986
Expenses related to the purchase of available for sale securities	$ 0	0	(3,356)	0
Interest income	11	39	28	101
Other, net	(120)	(258)	472	(610)
Total	$ (109)	$ 653	$ 2,608	$ 1,477

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net income attributable to Altisource (in dollars)	$ 10,589	$ 37,046	$ 49,077	$ 86,694
Weighted average common shares outstanding, basic (in shares)	18,715	19,091	18,669	19,608
Dilutive effect of stock options (in shares)	853	1,320	1,069	1,080
Weighted average common shares outstanding, diluted (in shares)	19,568	20,411	19,738	20,688
Earnings per share:
Basic (in usd per share)	$ 0.57	$ 1.94	$ 2.63	$ 4.42
Diluted (in usd per share)	$ 0.54	$ 1.82	$ 2.49	$ 4.19
Service Based Options
Anti-dilutive securities
Options excluded from the computation of diluted EPS (in shares)	400	400	400	600
Performance Based Options
Anti-dilutive securities
Options excluded from the computation of diluted EPS (in shares)	400	300	400	300

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COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Apr. 30, 2015
Concentration Risk
Other portfolio servicing revenue, percentage	19.00%		19.00%
Escrow and Trust Balances
Amounts held in escrow and trust accounts	$ 65.6		$ 65.6		$ 66.6
Ocwen | Revenue from Rights Concentration Risk | Sales Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	56.00%	60.00%	56.00%	59.00%
HLSS | NRZ
Concentration Risk
Business acquisition, percentage of voting interests acquired						78.00%

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SEGMENT REPORTING (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) segment	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Segment Reporting [Abstract]
Number of reporting segments | segment			3
SEGMENT REPORTING
Revenue	$ 252,745	$ 272,776	$ 758,676	$ 781,579
Cost of revenue	174,002	173,850	517,236	514,835
Gross profit	78,743	98,926	241,440	266,744
Selling, general and administrative expenses	53,886	51,338	161,709	155,310
Change in the fair value of Equator Earn Out				(7,591)
Income from operations	24,857	47,588	79,731	119,025
Total other income (expense), net	(6,061)	(6,388)	(15,873)	(21,773)
Income before income taxes and non-controlling interests	18,796	41,200	63,858	97,252
Total Assets:
Total assets	693,332		693,332		$ 721,798
Operating Segment | Mortgage Services
SEGMENT REPORTING
Revenue	204,696	209,506	612,243	583,873
Cost of revenue	132,399	122,724	381,543	350,238
Gross profit	72,297	86,782	230,700	233,635
Selling, general and administrative expenses	27,543	23,399	83,119	69,188
Change in the fair value of Equator Earn Out				0
Income from operations	44,754	63,383	147,581	164,447
Total other income (expense), net	8	9	57	28
Income before income taxes and non-controlling interests	44,762	63,392	147,638	164,475
Total Assets:
Total assets	315,384		315,384		325,461
Operating Segment | Financial Services
SEGMENT REPORTING
Revenue	17,599	21,337	57,461	67,080
Cost of revenue	13,238	15,418	41,645	46,058
Gross profit	4,361	5,919	15,816	21,022
Selling, general and administrative expenses	4,002	4,553	12,515	13,856
Change in the fair value of Equator Earn Out				0
Income from operations	359	1,366	3,301	7,166
Total other income (expense), net	28	31	63	21
Income before income taxes and non-controlling interests	387	1,397	3,364	7,187
Total Assets:
Total assets	44,652		44,652		53,757
Operating Segment | Technology Services
SEGMENT REPORTING
Revenue	41,544	51,437	120,291	159,399
Cost of revenue	38,557	44,419	122,874	144,565
Gross profit	2,987	7,018	(2,583)	14,834
Selling, general and administrative expenses	6,115	7,628	20,113	22,189
Change in the fair value of Equator Earn Out				(7,591)
Income from operations	(3,128)	(610)	(22,696)	236
Total other income (expense), net	1	38	101	21
Income before income taxes and non-controlling interests	(3,127)	(572)	(22,595)	257
Total Assets:
Total assets	141,846		141,846		151,969
Corporate Items and Eliminations
SEGMENT REPORTING
Revenue	(11,094)	(9,504)	(31,319)	(28,773)
Cost of revenue	(10,192)	(8,711)	(28,826)	(26,026)
Gross profit	(902)	(793)	(2,493)	(2,747)
Selling, general and administrative expenses	16,226	15,758	45,962	50,077
Change in the fair value of Equator Earn Out				0
Income from operations	(17,128)	(16,551)	(48,455)	(52,824)
Total other income (expense), net	(6,098)	(6,466)	(16,094)	(21,843)
Income before income taxes and non-controlling interests	(23,226)	$ (23,017)	(64,549)	$ (74,667)
Total Assets:
Total assets	$ 191,450		$ 191,450		$ 190,611

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PREMISES AND EQUIPMENT, NET per country (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Premises & equipment, net
Premises and equipment, net	$ 109,785	$ 119,121
United States
Premises & equipment, net
Premises and equipment, net	76,683	85,021
India
Premises & equipment, net
Premises and equipment, net	15,705	21,187
Luxembourg
Premises & equipment, net
Premises and equipment, net	14,372	9,944
Philippines
Premises & equipment, net
Premises and equipment, net	2,776	2,664
Uruguay
Premises & equipment, net
Premises and equipment, net	$ 249	$ 305